Dealmaker of the Week: Morton Pierce of Dewey & LeBoeuf
Three months ago, Dewey & LeBoeuf's M&A chair, Morton Pierce, was called in to Disney's Burbank offices...
September 08, 2009 at 08:20 AM
3 minute read
Three months ago, Dewey & LeBoeuf's M&A chair, Morton Pierce, was called in to Disney's Burbank offices in California as talks between the company's executives and Marvel Entertainment heated up. And for good reason, as there is probably little about long-time client Walt Disney that Pierce doesn't know.
Over the past 15 years, he has helped Disney navigate through a period of explosive growth, negotiating its $19bn (£11.6bn) purchase of Capital Cities/ABC in 1996, its acquisition of InfoSeek Corp in 1999, its $5.3bn (£3.2bn) purchase of Fox Family Worldwide in 2001, and its acquisition of the Muppets in 2004 – not to mention spinoffs of newspapers and other divisions.
His firm took a back seat to Skadden Arps Slate Meagher & Flom on Disney's $7.4bn (£4.5bn) acquisition of Pixar in 2006, but only because the firm was already helping Disney spin off its ABC radio division, Pierce said.
On Sunday (30 August), Disney made another megadeal, buying Marvel Entertainment for $4bn (£2.4bn), an acquisition that elicited both boos and cheers from the market. Disney claims the addition of 5,000 Marvel characters – including Iron Man and Incredible Hulk – will give it a long-sought lock on the teenage male audience.
The deal posed vast intellectual property (IP) challenges for the lawyers; Dewey would tap Weil Gotshal & Manges for the due diligence, while maintaining its leadership in IP negotiations. Negotiations were also complicated by the tax issues; while large public companies generally want payment in cash, Marvel wanted a deal that would have tax-free status for the stock portion of the deal.
After the companies set a deadline of 31 August for a signed deal, Pierce and his right-hand man, Chang-do Gong, went into overdrive to finish the due diligence in time. "I don't think Chang slept for four nights straight," he said.
Pierce was so busy he was forced to charter a plane to accompany his son to college last Friday. While his plane was waiting to take off, he hashed out the cash/stock mix and tax issues in a conference call with his client. "It was a good thing the line for takeoff at Teterboro was pretty long that day," he said.
Pierce wasn't the only one putting in long days. Marvel's lead counsel, Carl Sanchez at Paul Hastings Janofsky & Walker, said drafts of the agreement were routinely passed around at 4am. "Both teams were working 20 hours a day for the last nine days," Sanchez said. "Negotiations were serious and they were thorough."
Under the terms of the contract, the company is eligible for a $140m (£85m) breakup fee – a half-percent higher than the average 3% breakup penalty. It also got tighter-than-usual terms controlling how Marvel may respond to a potential competing bid.
But several hours after the boards of both companies approved the deal, Pierce's team discovered at 2am on Sunday that a Marvel executive's signature was missing. Marvel's general counsel was asked to wake up the executive to get his signature, which he did. "I've done a zillion of these deals," Pierce said. "When a client tells you they want it signed by 6am, we get it done."
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