Deals & Suits
Anheuser-Busch InBev SA/NV agreed on June 29 to pay $20.1 billion in cash for the 50 percent of Mexican brewer Grupo Modelo S.A.B. de C.V. that AB InBev doesn't already own. The buyer is offering $9.15 a share in cash for Modelo, a 30 percent premium to the target's closing price on June 22, the last trading day before news of the talks broke.
AB InBev acquired the stake in the 2008 takeover of Anheuser-Busch Companies Inc. by InBev NV/SA that created AB InBev. Anheuser-Busch bought the stake in the early 1990s. Modelo makes Corona Extra, Modelo Especial, Negra Modelo, and Pacifico, while AB InBev produces Budweiser, Stella Artois, and Beck's. AB InBev and Modelo hope to close the deal in the first quarter of 2013 pending approvals from regulators and Modelo shareholders.
In a deal that will close at the same time, Constellation Brands Inc. will pay $1.85 billion for the 50 percent of Crown Imports LLC that Modelo now owns. Constellation and Modelo formed the joint venture in 1996 to import Modelo's wares into the United States and market them here.
For acquiror Anheuser-Busch InBev SA/NV (Leuven, Belgium)
Chief legal and corporate affairs officer Sabine Chalmers, vice presidentlegal, M&A, and commercial John Blood, vice presidentcorporate Benoit Loore, associate general counsel Thomas Larson, and legal directorslegal, M&A, and commercial Maria Fernanda Lima de Rocha Barros and Craig Katerberg.
Skadden, Arps, Slate, Meagher & Flom:
M&A: Marie Gibson, Thomas Greenberg, and Paul Schnell. Antitrust: Clifford Aronson, Ian John, and Steven Sunshine. Tax: Victor Hollender. (All are in New York except for Washington, D.C.based Sunshine.) Anheuser-Busch was a longtime Skadden client, and Schnell represented the company on its 2008 sale to InBev.
Sullivan & Cromwell:
M&A: Frank Aquila, George Sampas, and Krishna Veeraraghavan. Financing: John Estes, Neal McKnight, and George White III. Tax: Ronald Creamer Jr. Intellectual property: Nader Mousavi. (All are in New York except for London-based White and Palo Altobased Mousavi.) The firm is also advising the company on its $1.85 billion sale of a 50 percent interest in Crown to Constellation Brands. Sullivan advised some of InBev's predecessors as early as the 1970s. Aquila first represented InBev in 2006 on its $82 million sale of Rolling Rock beer to Anheuser-Busch.
Freshfields Bruckhaus Deringer:
Corporate: Vincent Macq and associates Davina Devleeschouwer and Frédéric Elens. Antitrust: John Davies, Thomas Janssens, senior associate Daniel Burton, and associates Lars Görlitz, Florence Leroux, and Alessandro Turati. (All are in Brussels except for London-based Davies, Burton, and Turati.)
Mijares, Angoitia, Cortés y Fuentes:
Francisco Fuentes Ostos and Patricio Trad Cepeda. (They are in Mexico City.)
Von Wobeser y Sierra:
Luis Burgueño and Claus von Wobeser. (They are in Mexico City.)
For acquiror Constellation Brands Inc. (Victor, New York)
General counsel Thomas Mullin, corporate counsel David Sorce, and associate general counsel Barbara LaVerdi and H. Elaine Ziakas. At Crown Imports LLC: general counsel Michael Lurie.
M&A: James Bourdeau, Jeffrey LaBarge, and associates John LaBoda III, John Moragne, and Eric Tanck. Litigation: Carolyn Nussbaum and Frank Penski. Financing: Frank Hamblet, Craig Mills, and associates Sarah Abel and Deirdra Nash. Securities: Roger Byrd. Intellectual property: counsel Kristen Walsh. (All are in Rochester, New York, except for Penski and Nash, who are in New York, and Hamblet, Mills, and Abel, who are in Boston.) Bourdeau represented the company in 2009 when it sold its spirits brands to New Orleansbased Sazerac Company Inc. for $334 million, and the firm helped represent Constellation on its $1.35 billion purchase of Robert Mondavi Corp. in 2004.
McDermott Will & Emery:
Antitrust: Raymond Jacobsen Jr. (He is in Washington, D.C.)
For target Grupo Modelo S.A.B. de C.V. (Mexico City)
General counsel Margarita Hugues Velez.
Cravath, Swaine & Moore:
M&A: David Mercado. Corporate: Joel Herold and associates Stephanie Gallina, Benjamin Hewitt, Jose Lopez, and Dean Mades. Antitrust: Christine Varney and associate Margaret Segall. Tax: Michael Schler and associate Christopher Fargo. Executive compensation and benefits: Jennifer Conway and practice area attorney Michael Krasnovsky. (All are in New York except for London-based Mercado and Hewitt.) Cravath has advised Modelo for about 15 years and represented the company on the ABInBev deal.
Alejandro Duclaud. (He is in Mexico City.) Duclaud also worked on the ABInBev deal.
Creel, García-Cuéllar, Aíza y Enríquez:
Jean Michel Enríquez. (He is in Mexico City.)
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Walgreen Co. took a first step toward expanding into Europe on June 19 when it agreed to pay KKR & Co. LP and Alliance Boots GmbH executive chairman Stefano Pessina $6.7 billion in cash and stock for a 45 percent stake in Alliance. KKR bought the U.K. drugstore chain for $18.5 billion in 2007.
Walgreen will pay $4 billion in cash and stock worth $2.7 billion to KKR and Pessina, who controls about a third of the company and will take stock rather than cash. The U.S. drugstore giant also has the option to buy the rest of the company in 2015 for $4.1 billion in cash and $5.4 billion in stock. Alliance Boots has $11 billion in debt that Walgreen would assume if it acquires the company in three years. At press time Walgreen expected to close the initial purchase in September pending approvals from regulators.
For acquiror Walgreen Co. (Deerfield, Illinois)
General counsel Thomas Sabatino and directorcorporate and acquisitions Joseph Greenberg.
Wachtell, Lipton, Rosen & Katz:
Corporate: Andrew Brownstein, Benjamin Roth, and associates David Cohen, Edward Lee, and Octavian Timaru. Executive compensation and benefits: Michael Segal and associate D. Miishe Addy. Finance: Eric Rosof and associate Michael Benn. Tax: Jodi Schwartz, T. Eiko Stange, and associate Vincent Kalafat. (All are in New York.) Wachtell also represented Walgreen on its 2007 purchase of Option Care Inc. for $850 million and its 2010 acquisition of Duane Reade Inc. for $1 billion.
Allen & Overy:
Corporate: Nicolaus Ascherfeld, Marc Feider, Richard Kim, Justin Steer, counsel Bertrand Geradin and Karine Montagut, senior associates Fabian Christoph, Ruediger Kleuber, and Justin Tan, associates Emily Barker, Alys Carlton, Arnaud de Rochebrune, Max Landshut, Jelle Menalda van Schouwenburg, Adrien Pastorelli, and Frederieke van Baal, and trainee Suzi Duncan. Litigation: associate Jean-Baptiste Thienot. Banking: Ben Fox, Norbert Wiederholt, and associates Ian Johnston and Max Mayer. Competition: Paul Glazener and associate Maarten de Jong. Tax: Lydia Challen and senior associate James Burton. Health care regulatory: of counsel Leigh Hancher and associate Elske Henny. Incentives: Sylvie Watts and associate Andrew Nealey. Pensions: Däna Burstow and associate Stephen Beattie. Intellectual property and information technology: Jim Ford and associate Alex Shandro. Environmental: Matthew Townsend and associate Mary Neave. Employment litigation: Mark Mansell and associate Ainsley Benefield. Real estate: Christopher Woolf. (All are in London except for the following: Ascherfeld, Christoph, Kleuber, and Landshut are in Hamburg, Germany. Feider, Geradin, and Pastorelli are in Luxembourg. Kim and Tan are in Shanghai. Montagut, de Rochebrune, and Thienot are in Paris. Steer, Barker, Menalda van Schouwenburg, van Baal, Fox, Johnston, Mayer, Glazener, de Jong, Hancher, and Henny are in Amsterdam. Wiederholt is in Frankfurt.)
Bär & Karrer:
Corporate: Thomas Reutter, Roland Truffer, and associates Claudio Bazzi and Daniel Raun. (All are in Zurich.) Alliance is a Swiss company.
Antitrust: counsel Lawson Hunter and associate Ashley Weber. (Hunter is in Ottawa. Weber is in Toronto.)
Weil, Gotshal & Manges:
U.S. antitrust: Steven Bernstein, Steven Newborn, counsel John Sipple, and associate Vadim Brusser. (All are in Washington, D.C.)
For target Alliance Boots GmbH (Zug, Switzerland)
At Alliance Boots: Group legal counsel??Marco Pagni and general counselAlliance Healthcare Eddie Lawson. At KKR: general counsel David Sorkin and general counselEurope Susanna Berger.
Darrois Villey Maillot & Brochier:
Corporate: Ben Burman and Alain Maillot. (Both are in Paris.)
Simpson Thacher & Bartlett:
M&A: Gary Horowitz, Mark Pflug, and associates Alexander Coedo, Daniel Layfield, Daniel Tseng, and John Wang. Tax: Steven Todrys, senior counsel Meredith Jones, and associates Sean Austin and Sean FitzGerald. Antitrust: Joseph Tringali, David Vann, senior counsel Michael Naughton, and associate Ellen Frye. Credit: Ian Barratt and associates Christopher Bell and Lucy Jenkins. Securities: Michael Nathan and associate Justin Hoffman. Executive compensation and employee benefits: Andrea Wahlquist and associate Jennifer Pepin. Intellectual property: Lori Lesser.??Environmental: senior counsel Adeeb Fadil and associate Timothy Mulvihill. Real estate: counsel Krista McManus. (All are in New York except for Jones, Vann, Barratt, and Jenkins, who are in London.)
Executive compensation: Daniel Kossoff. (He is in London.)
Corporate: Vikram Nagrani. (He is in Gibraltar.) AB Acquisitions Holdings Limited, an Alliance Boots entity, is incorporated in Gibraltar.
Niederer Kraft & Frey:
Corporate: Andreas Casutt, Philippe Weber, senior associate Patrik Peyer, associate Gian-Andrea Caprez, and junior associate Sandro Germann. (All are in Zurich.)
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U.S. v. GSK
In the largest health care fraud settlement in history, U.K. drugmaker GlaxoSmithKline plc agreed to pay a total of $3 billion in penalties to the U.S. government on July 2. The company pleaded guilty to criminal allegations that it had illegally promoted two drugs, Paxil and Wellbutrin, for "off-label" uses and failed to report safety data on a third, Avandia. For those charges, it paid nearly $1 billion in criminal fines. The company also agreed to pay $2 billion to settle civil allegations that it reported false "best prices" to the government; made misleading statements about Avandia's safety; and promoted seven other drugs for unapproved uses. GSK did not admit to any wrongdoing in connection with the civil claims.
The plea agreement brings to a close a sprawling, seven-year state and federal investigation. The probe was spawned by whistle-blower complaints filed against GSK beginning in early 2003 in which former employees alleged that GSK promoted its drugs for off-label uses. The government intervened last year. As part of the settlement, GSK resolved the qui tam claims for $1.042 billion. At press time the whistle-blowers' share of the settlement had not yet been determined.
GSK will also implement a five-year corporate integrity plan that changes how its sales force is compensated and demands greater transparency in research practices and publication policies.
For qui tam plaintiffs Gregory Thorpe and Blair Hamrick
Kenney & McCafferty:
Tavy Deming, Brian Kenney, and associate Emily Lambert. (They are in Philadelphia.) The firm brought the first qui tam suit in January 2003.
For qui tam plaintiffs Thomas Gerahty and Matthew Burke
Phillips & Cohen:
Erika Kelton, counsel Larry Zoglin, and associate Erin Krimbill. (Zoglin is in San Francisco, and the others are in Washington, D.C.) The firm filed suit several months after Kenney & McCafferty filed suit.
For qui tam plaintiff Lois Graydon
Grant & Eisenhofer:
Reuben Guttman and counsel Traci Buschner. (They are in Washington, D.C.)
For qui tam plaintiff Michael LaFauci
Stone & Magnanini:
Robert Magnanini and David Stone. (They are in Short Hills, New Jersey.)
For intervenor the United States of America
At the U.S. Department of Justice: Deputy Attorney General James Cole. At the civil division, commercial litigation branch: Acting Deputy Attorney General Joyce Branda, Acting Assistant Attorney General Stuart Delery, and trial attorneys Daniel Anderson, Charles Biro, Andy Mao, Brian McCabe, Natalie Priddy, Douglas Rosenthal, Lisa Samuels, Jennifer Stalzer, Jeff Toll, and Jamie Ann Yavelberg. At the civil division, consumer protection branch: assistant directors Jill Furman and Mark Josephs and trial attorneys Timothy Finley, David Frank, and Patrick Jasperse. At the U.S. attorney's office in Denver: U.S. Attorney John Walsh and Assistant U.S. Attorneys Marcy Cook and Edwin Winstead. At the U.S. attorney's office in Boston: U.S. Attorney Carmen Ortiz and Assistant U.S. Attorneys Sara Bloom, Shannon Kelley, Brian Perez-Dapple, Amanda Strachan, and Susan Winkler.
For defendant GlaxoSmithKline plc (London)
Senior vice presidentglobal litigation Elpidio Villarreal, assistant general counsel Elizabeth Hallyburton, and assistant general counsel Christina Diaz.
Covington & Burling:
Geoffrey Hobart, Richard Kingham, Matthew O'Connor, Mona Patel, counsel Sarah Franklin, Joseph Kresse, and associate Maria Georges. (Hobart is in London and Washington, D.C.; the rest are in Washington, D.C.) The firm led in interactions with the U.S. attorney's offices, handled matters related to seven GSK products, and worked on the compliance agreement.
Thomas Lee II and associates Tara Boyd, Erin Fisher, and Sarah Wyatt. (Boyd and Fisher are no longer at Dechert; the others are in Philadelphia.) The firm handled matters related to Paxil, some aspects of pricing, and probes related to drugs produced by SmithKline Beecham plc before its merger with GlaxoWellcome plc in 2000.
Brian French, Mark Seltzer, and associate Ashley Baynham. (Baynham is in New York; the others are in Boston.) The firm advised on pricing and on investigations related to drugs produced by GlaxoWellcome prior to the SmithKline Beecham merger.
Sean Fahey, Nina Gussack, and George Lehner. (Lehner is in Washington, D.C.; the others are in Philadelphia.) The firm handled issues pertaining to the drug.
Paul Kalb, Kristen Koehler, and associate Lauren Roth. (They are in Washington, D.C.)
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IN RE RAIL FREIGH FUEL SURCHARGE ANTITRUST
A class of shippers responsible for as much as 80 percent of all railroad freight may proceed with a giant antitrust class action against the nation's top railroad companies, a federal district court judge in Washington, D.C., ruled on June 21.
The shippers' case was filed five years ago. The shippers allege that the railroad companiesBNSF Railway Company, Union Pacific Railroad Company, CSX Transportation Inc., and Norfolk Southern Railway Companycolluded to add on excessive fuel surcharges. The potential liability is in the billions of dollars.
The case was filed in 2007, shortly after the U.S. Surface Transportation Boardthe body that regulates prices for certain kinds of railroad freightannounced that the fuel surcharges were unacceptable because they didn't correspond to the price of fuel. That prompted shippers of freight not regulated by the board to file suit. The litigation was consolidated before U.S. District Judge Paul Friedman in Washington, D.C., and the shippers moved for class certification in spring 2010. The judge asked for additional briefs last year after the U.S. Supreme Court decision on Wal-Mart v. Dukes tightened standards for class commonality.
In their motion for class certification, the shippers argued that there was common evidence showing that the railroads harmed the class by conspiring to fix fuel surcharges. The railroad companies countered that the plaintiffs failed both to show a coordinated surcharge policy and that routes, shipper preferences, and other factors make fuel prices highly individualized, and thus the case was not suitable for class treatment. The railroads emphasized this position in their postWal-Mart brief.
At press time the railroad companies had petitioned the U.S. Court of Appeals for the D.C. Circuit for permission to appeal the ruling.
For plaintiffs Dust Pro Inc. (Phoenix) et al.
Quinn Emanuel Urquhart & Sullivan:
Daniel Brockett, Marc Greenwald, Stephen Neuwirth, Richard Werder Jr., counsel Steig Olson, and associates Joseph Hammond, Ben Harrington, Sami Rashid, and Kyle Taylor. (They are in New York.)
William Butterfield, Michael Hausfeld, Michael Lehmann, and associate Sathya Gosselin. (Lehmann is in San Francisco; the others are in Washington, D.C.)
For defendant Norfolk Southern Railway Company (Norfolk, Virginia)
Claudia Higgins, Saul Morgenstern, Jennifer Patterson, and associates Amanda Croushore, Margaret Prystowsky, and Jeffrey Saltman. (Higgins and Saltman are in Washington, D.C.; the others are in New York.) The firm led the four railroads' opposition to the class action motion. It was retained on the basis of recent experience with the company in another matter, and in handling complex antitrust class action litigation.
Skadden, Arps, Slate, Meagher & Flom:
John Nannes, counsel Tara Reinhart, and associate Sean Tepe. (They are in Washington, D.C.)
For defendant BNSF Railway Company (Fort Worth)
Executive vice presidentlaw and secretary Roger Nober, vice president and general counsel Charles Shewmake, vice president and general counselregulatory Richard Weicher, senior general attorney David Pryor, and attorneys Tamara Middleton and Adam Weiskittel.
Richard Favretto, Michael Lackey, Gary Winters, and associate Rebecca Valentine. (Winters has since left the firm; the others are in Washington, D.C.) The firm is cocounsel; BNSF has been a client since Burlington Northern Railroad merged with the Atchison, Topeka and Santa Fe Railway in 1996. Prior to that, it represented the Atchison, Topeka and Santa Fe Railway for nearly a decade.
Steptoe & Johnson:
Samuel Sipe Jr. and Linda Stein. (They are in Washington, D.C.) The firm is cocounsel, and was retained in 2007 on the basis of long-standing representation of BNSF in commercial disputes and matters involving economic regulation.
For defendant CSX Transportation Inc. (Jacksonville)
Crowell & Moring:
David Cross, Kent Gardiner, Kathryn Kirmayer, Shari Lahlou, and associates Michael Lieberman and Luke van Houwelingen. (They are in Washington, D.C.)
For defendant Union Pacific Railroad Company (Omaha)
Assistant vice presidentlaw Lawrence Wzorek.
Tyrone Childress and David Meyer. (They are in Los Angeles.) The firm was cocounsel; the attorneys represented the company previously while at Howrey.
Covington & Burling:
Counsel Thomas Isaacson and Alan Wiseman. (They are in Washington, D.C.) The attorneys brought the client with them from their previous firm, Howrey.
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FACCIOLA ET AL v. GREENBERG TRAURIG ET AL.
Greenberg Traurig and Quarles & Brady agreed to fork over a combined $87.5 million to resolve claims that they failed to put the brakes on a $900 million Ponzi scheme carried out by two mortgage industry clients.
Greenberg agreed on June 20 to pay $61 million to settle a class action brought in federal district court in Phoenix by investors in mortgage lender Mortgages Ltd. and securities dealer Radical Bunny LLC. U.S. District Judge Frederick Martone preliminarily approved a related $26.5 million class settlement with Quarles & Brady the same day. The firms do not admit any wrongdoing.
Investors who bought now-worthless securities or loans from two companies sued Greenberg and Quarles & Brady in May 2010, claiming that the firms violated Arizona state securities laws by aiding and abetting a Ponzi scheme run by their respective clients. Greenberg's client, Mortgages Ltd., was an Arizona company that made loans to real estate developers and then sold most of the loans to investors. Quarles & Brady's client, Radical Bunny, helped raise money for Mortgages Ltd. by illegally operating as an unlicensed securities dealer, according to the investors' complaint. After Mortgages Ltd. filed for bankruptcy in 2008, state and federal regulators conducted investigations. In 2010 the Arizona Corporation Commission issued a cease and desist order against Radical Bunny, and the Securities and Exchange Commission found that a Mortgages Ltd. affiliate had willfully violated securities laws.
According to the plaintiffs, Mortgages Ltd. retained Greenberg to prepare 11 private offering memorandums between 2006 and 2008. The suit alleged that Greenberg's lead partner on Mortgages Ltd. matters, Robert Kant, was aware that the company was being funded with proceeds collected from illegal securities sales by Radical Bunny but did not report the problem to regulators.
The investors also claimed that a Quarles partner questioned in a file note whether Mortgages Ltd.'s relationship with Radical Bunny had "a Ponzi-scheme feel" to it. Quarles lawyers later stated in SEC testimony that they told Radical Bunny managers to stop selling the securities and to contact regulators to admit they had violated securities laws, according to the complaint. The plaintiffs maintained that the firm, however, continued to assist Radical Bunny in new securities sales.
Judge Martone certified both classes in March. In motions urging approval of the settlements, class counsel wrote that their expert had pegged damages at up to $499 million for Greenberg Traurig and up to $552 million for Quarles & Brady. At press time the plaintiffs firms were seeking a fee of 15 percent of the settlement.
Quarles & Brady Phoenix managing partner Jon Pettibone said in a statement that neither federal nor Arizona regulators had found Quarles & Brady at fault in its representation.
For plaintiff Fred C. Hagel and Jacqueline M. Hagel Revocable Living Trust (Phoenix)
Bonnett, Fairbourn, Friedman & Balint:
Francis Balint Jr. and Andrew Friedman. (They are in Phoenix.)
For plaintiff Robert Facciola et al.
Tiffany & Bosco:
Richard Himelrick and associate J. James Christian. (They are in Phoenix.) The firm was colead counsel with Bonnett Fairbourn in a related class action.
For defendant Greenberg Traurig (Miami)
Williams & Connolly:
Kevin Downey, Ellen Oberwetter, Kenneth Smurzynski, and associates Grace Aduroja, Colette Connor, and Patrick Houlihan. (They are in Washington, D.C.) The firm is known for representing law firms facing litigation.
Galbut & Galbut:
Martin Galbut and associate Michaile Berg. (They are in Phoenix.) The firm was local counsel.
For defendant Quarles & Brady (Milwaukee)
Morgan, Lewis & Bockius:
Scott Garner, Robert Gooding Jr., and associates Heather Condon, Shawn Kennedy, and Jared Kirkwood. (They are in Irvine, California.)
Ross Todd, with E.D.