Express Scripts, Inc., announced an agreement to buy Medco Health Solutions, Inc., for $29.1 billion on July 21 in a deal that would create the largest pharmacy benefits manager in the United States. The buyer will pay $28 in cash and 0.81 Express Scripts shares for each Medco share, consideration worth about $71.36, which reflects a 28 percent premium to the target’s closing price on the day before the deal was announced.
The major hurdle to the deal’s completion will likely be regulatory scrutiny from the Federal Trade Commission. The merger would leave Express Scripts with only one large independent competitor, CVS Care­mark Corporation, but insurers and large companies could also opt to manage drug prescriptions themselves rather than rely on Express Scripts or CVS. For example, UnitedHealthCare Group currently uses Medco but will bring its pharmacy benefits in-house next year.
Express Scripts and Medco hope to close the transaction in the first half of 2012 pending approvals from the FTC, other regulators, and both sets of shareholders.
In-House: General counsel Keith Ebling, deputy general counsel Martin Akins, and assistant general counsel Chris McGinnis.
Skadden, Arps, Slate, Meagher & Flom: M&A: Howard Ellin, Lou Kling, and Kenneth Wolff. Antitrust: Clifford Aronson. (All are in New York.) Kling and Ellin represented Express Scripts in 2009 on its $4.7 billion purchase of NextRx, the pharmacy benefits division of WellPoint, Inc. The duo also advised the company in 2007 on its losing hostile bid for Caremark RX, Inc., which ended up completing a friendly combination with CVS Corporation [Big Deals, January 2007].
Holland & Knight: Health care: Michael Manthei, Jeffrey Mittleman, Shannon Salimone, and associates Jonathan Anderman, Jenna Phipps Bigornia, and Melissa Wong. Insurance: Thomas Morante and senior counsel David Sofge. Corporate : Rodney Bell, Danielle Price, and associate Da’Morus Cohen. International: Ronald Oleynik and associate David Roth. (Manthei, Mittleman, Anderman, Bigornia, and Wong are in Boston. Salimone is in Tallahassee. Morante, Sofge, Bell, Price, and Cohen are in Miami. Oleynik and Roth are in Washington, D.C.)
In-House: General counsel Thomas Moriarty, assistant counsel Paul Sheridan, counsel–corporate law Lori Marino, and assistant general counsel Elizabeth ” Betsy” Ferguson and Colleen McIntosh.
Sullivan & Cromwell: M&A: Matthew Hurd, James Morphy, and associates Michael Horwitz, Ashish Thaker, and Eric Treichel. Executive compensation and benefits: Matthew Friestedt and associate J. Michael Snypes, Jr. Tax: Ronald Creamer, Jr., and associate King Kai Chu. Financing: S. Neal McKnight and associate Jessica Weiss. (All are in New York.) Sullivan represented Citigroup Inc., Goldman, Sachs & Co., and J.P. Morgan Chase & Co. as the bankers to Merck & Co., Inc., when it spun off Medco in 2003. S&C also represented Medco on its $2.2 billion purchase of Accredo Health, Incorporated, in 2005.
Dechert: Antitrust: Mike Cowie, Paul Denis, counsel Paul Frangie, and associates Eric Coch­ran, Jennifer Coon, and Rani Habash. (All are in Washington, D.C.) As a partner at Howrey, Cowie represented Medco in getting antitrust approval in Europe for a joint venture with Celesio AG, a German health care and pharmaceutical company. He was also antitrust counsel to the company on its $730 million purchase of United BioSource Corp. last year and represented Medco in a class action lawsuit involving compound drug pricing settled in 2009.
BHP Billiton / Petrohawk
BHP Billiton is paying a hefty premium to expand its shale gas production business in the United States with its agreement to buy Petrohawk Energy Corporation for $12.1 billion in cash and another $3 billion in assumed debt. At $38.75 per Petrohawk share, the deal came at a 65 percent premium to the target’s closing price on July 14, the day the deal was announced.
BHP, a mining company whose two corporate entities are listed in London and Melbourne, just entered shale gas in February, when it struck a $4.75 billion deal to buy shale assets in Arkansas from Chesapeake Energy Corporation. BHP and Petrohawk hope to close their transaction in the third quarter of this year pending approvals from Petrohawk shareholders and regulators.
In-House: Chief legal counsel David Williamson, vice president–legal Kirsten Gray, senior managers–legal Andrew McBride and Justin Stuhldreher, and managers–legal Anthony Austin, Rebecca Campbell, and Jessica Devitt.
Sullivan & Cromwell: M&A: James Morphy, Krishna Veeraraghavan, of counsel Janet Geldzahler, and associates Moowi Kim and Ken Myers. Executive compensation and benefits: Matthew Friestedt and special counsel Henrik Patel. Tax: Ronald Creamer and associate King Kai Chu. Financing: John Estes and S. Neal McKnight. (All are in New York except for Geldzahler, who is in Washington, D.C.)
Morgan, Lewis & Bockius: Energy transactions: David Asmus, Michael King, and associates Blake Ellis and Andrew Milano. Securities: Steven Navarro and associate Michael Lee. Employee benefits: Amy Kelly and associates Carly Grey and Patrick Rehfield. Labor and employment: Stanley Lechner and associate Ross Friedman. FERC and CFTC issues: Mark Haskell. Antitrust: Harry Robins and associates Sean Duffy and Heather Fuentes. Antitrust/ CFIUS: Stephen Mahinka. Environmental: senior counsel Christopher McAuliffe. Derivatives: Thomas D’Ambrosio . Real estate: Jeannine Bishop and associates Sara McCormick, Meredith Rettaliata, and Jason Roberts. Executive compensation: Daniel Hogans. Environmental litigation: of counsel Maxine Woelfling. Energy: asso­ciate Bryan Clark. (Asmus, King, and Ellis are in Houston. Milano, Navarro, Lee, Robins, Fuentes, and D’Ambrosio are in New York. Kelly, Bishop, McCormick, Rettaliata, and Roberts are in Philadelphia. Grey, Rehfield, Lechner, Haskell, Duffy, Mahinka, Hogans, and Clark are in Washington, D.C. Friedman is in Chicago. McAuliffe is in Princeton. Woelfling is in Harrisburg.)
Bracewell & Giuliani: Labor and employment law: Amy Halevy and associate Rebecca “Becky” Baker. Employee benefits: Scott Sanders and associates Allison Perry and Christina Welch. (All are in Houston.)
In-House: General counsel David Elkouri, deputy general counsel Connie Tatum, and associate general counsel Travis Counts.
Simpson Thacher & Bartlett: M&A: Lee Meyerson, Eric Swedenburg, and associates J ay Blackman, Andrew Calder, Daniel Layfield, and Viktor Sapezhnikov. Executive compensation and employee benefits: Andrea Wahlquist and associate Samantha Shipp. Tax: Nancy Mehlman and associate Anthony Minervini. Environmental: senior counsel Adeeb Fadil. (All are in New York except for Blackman and Calder, who are in Houston.)
Thompson & Knight: Corporate: William Heller IV, Sarah McLean, and associate Julie Mediamolle. (All are in Houston.) The firm has done work for Petrohawk since the company’s current management team took over in 2004, and it previously represented 3Tec Energy Corporation, which was founded by the same team.
Google / Motorola Mobility
Google Inc. lost out to Apple Inc. and Microsoft Inc. in the bidding for Nortel Networks Corporation’s patents in June. But seven weeks later, Google struck a deal that will give it not only 17,000 patents related to smartphone technology but also the capacity to manufacture the phones. The Internet search giant agreed on August 15 to pay $12.5 billion in cash for Motorola Mobility Holdings, Inc. At $40 per target share, the deal comes at a 64 percent premium to the target’s closing price on August 12, the last trading day before the deal was announced. The price validated the decision of Motorola, Inc., to split into Motorola Mobility and Motorola Solutions, Inc., a division announced in 2008 and completed in January. While Motorola Mobility makes Droid smartphones and the Xoom tablet, Motorola Solutions focuses on communications products and services for businesses and governments. The Droid devices run Google’s Android mobile operating system, which Google also licenses to other device manufacturers. Google says it will run Motorola Mobility as a separate division, though the long-term effect on the device market on other Android licensees is unclear. Google and Motorola Mobility hope to close the deal early next year pending approvals from Motorola shareholders and regulators in the United States and abroad.
In-House: Chief legal officer David Drummond, deputy general counsel Don Harrison, legal director–M&A Christine Flores, and senior counsel Ronald Chen.
Cleary Gottlieb Steen & Hamilton: M&A: Ethan Klingsberg, Victor Lewkow, Matthew Salerno, and associates Esther Farkas, Tian Gao, Aaron Meyers, Ritu Narula, and Kimberly Spoerri. Antitrust: Leah Brannon, Maurits Dolmans, David Gelfand, Francisco Enrique González-Díaz, and associates Katia Colitti, Elaine Ewing, and Brandon Maslov. Intellectual property: Lawrence Friedman, Leonard Jacoby, and associates Antonia Carew-Watts, Kathleya Chotiros, Nathaniel Jedrey, Megan Prunella, and Thomas Wilhem. Executive compensation and employee benefits: Michael Albano and associate Leah LaPorte Malone. Tax: Sheldon Alster and associates Corey Goodman and Daniel Winnick. Real estate: Steven Horowitz and associates Anthony Cerceo and Joshua Panas. Environmental and liability issues: Michael Lazerwitz and counsel W. Richard Bidstrup. Securities law: Janet Fisher. (All are in New York, except for Brannon, Gelfand, Colitti, Ewing, Maslov, and Bidstrup, who are in Washington, D.C., and Dolmans and González-Díaz, who are in Brussels.) Cleary represented Google on its $700 million purchase of ITA Software, Inc., earlier this year and on its $750 million purchase of AdMob Inc. last year. The law firm was antitrust counsel to Google on its $3.1 billion purchase of DoubleClick Inc. in 2008.
In-House: General counsel Scott Offer.
Wachtell, Lipton, Rosen & Katz: Corporate: David Karp, of counsel Patricia Vlahakis, and associates Steven Abt, Ross Fieldston, and Carmen Woo. Antitrust: Damian Didden and associate Nathaniel Asker. Executive compensation and benefits: Adam Shapiro and associate Michael Schobel. Tax: Deborah Paul and associates Tijana Dvornic and Vincent Kal­afat. (All are in New York.)
HP / Autonomy
Almost a decade ago, Hewlett-Packard Company made a large bet on personal computers with the $25 billion acquisition of Compaq Computer Corp. HP walked away from that bet, but made another large one on August 17, when the tech giant announced that it hoped to sell or spin off its PC division and agreed to buy enterprise software company Autonomy Corporation plc for $10.8 billion in cash.
HP currently derives less than 3 percent of its revenues from software.
HP will pay $42.11 per Autonomy share, a 64 percent premium to the target’s closing price on August 17. HP shareholders panned the deal; the buyer’s shares fell by 22 percent on the news, which amounted to a $14 billion decline in the company’s market capitalization. The companies hope to close the deal by the end of the year pending approvals from regulators and Autonomy shareholders.
In-House: General counsel Michael Holston, deputy general counsel Paul Porrini, associate general counsel David Ritenour, asso­ciate general counsel–M&A Richard Arnold, Jr., director–corporate and securities HP International Sergio Letelier, and attorney–corporate, securities, and attorney-corporate, securities, and M&A, HP International Emma Walton.
Gibson, Dunn & Crutcher: M&A: Dennis Friedman, James Moloney, Jeffery Roberts, Selina Sagayam, and associates Sophie Bernabé, Jonathan Corsico, Sian Owles, and Hedley Roost. Finance: Aaron Adams, Gregory Campbell, Darius Mehraban, and asso­ciate Dev Ghose. (Friedman, Corsico, Adams, Mehraban, and Ghose are in New York; Moloney and Bernabé are in Irvine, California; and Roberts, Sagayam, Owles, Roost, and Campbell are in London.) Gibson represented HP on its purchases of ArcSight, Inc., for $1.5 billion [Big Deals, November 2010] and of Palm, Inc., for $1.2 billion.
Drinker, Biddle & Reath: Antitrust: Joanne Lewers, Robert Skitol, and counsel Robin Sampson. (Lewers and Sampson are in Philadelphia. Skitol is in Washington, D.C.) HP general counsel Holston is a former Drinker Biddle partner. Skitol also advised HP on its purchases last year of ArcSight and of 3Par Inc. for $2.35 billion [Big Deals, November 2010]; on its $13.9 billion purchase of Electronic Data Systems Inc. in 2008 [Big Deals, August 2008]; and on the Compaq deal.
Freshfields Bruckhaus Deringer: Corporate: Edward Braham and Ben Spiers. Employment, pensions and benefits: Nicholas Squire. Antitrust: Thomas Ensign. (All are in London except for Ensign, who is in Washington, D.C.)
Skadden, Arps, Slate, Meagher & Flom: Tax: Hal Hicks, Peter Oosterhuis, and Matthew Rosen. (Hicks and Oosterhuis are in Washington, D.C. Rosen is in New York.)
Skadden, Arps, Slate, Meagher & Flom: M&A: Peter Atkins and Kenton King. (Atkins is in New York. King is in Palo Alto.)
In-House: General counsel Andrew Kanter.
Slaughter and May: Corporate: Stephen Cooke, Gary Eaborn, and associates Peter Sugden and Sally Wokes. Employment: Roland Doughty. (All are in London.)
Morgan, Lewis & Bockius: Antitrust: Harry Robins, Izzet Sinan, associate Heather Fuentes, and international consultant Martin D’Halluin. Corporate: William Myers. Tax: Bart Basset. Securities: David Sirignano. (Robins and Fuentes are in New York. Sinan is in Brussels. Myers is in San Francisco. Basset is in Palo Alto. Sirignano is in Washington, D.C.) Thomas Kellerman, the managing partner of Morgan, Lewis’s Palo Alto office, represented Autonomy on its 1998 IPO in London when he was a partner there with Brobeck Hale and Dorr. That firm was a joint venture between San Francisco’s Brobeck, Phleger & Harrison and Boston-based Hale and Dorr. Morgan, Lewis picked up a significant number of Brobeck partners after the firm’s collapse.—D.M.