Deals & Suits
Some analysts speculated that Sprint Nextel Corporation would try to thwart the planned merger of T-Mobile USA and MetroPCS Communications Inc. by launching a hostile bid for MetroPCS. Instead, Sprint Nextel agreed to sell a 70 percent stake to Softbank Corp. for $20.1 billion, in what would be the largest foreign acquisition ever by a Japanese company. The announcement came on October 15, less than two weeks after U.S. cell phone rivals T-Mobile and MetroPCS signed their deal. Sprint Nextel's 56 million subscribers make it the third-largest cell phone carrier in the United States after AT&T Inc. and Verizon Communications Inc. T-Mobile is fourth, MetroPCS sixth.
Softbank will buy $8 billion worth of shares directly from Sprint Nextel, which will use the cash to compete against its larger rivals. Softbank will also purchase another $12.1 billion in Sprint Nextel stockabout 55 percent of the target's public floatin the open market at $7.30 per share. The rest will be converted into shares of a new publicly traded entity to be called New Sprint. The stock market valued Sprint Nextel at about $17 billion, or $5.70 a share, on the afternoon of October 15, a 13 percent premium to its closing price on October 11, the last trading day before news of a possible deal broke. The parties hope to close the deal by the middle of 2013 pending approvals from regulators and Sprint Nextel shareholders.
For acquiror Softbank Corp. (Tokyo)
General counsel Masato Suzaki.
Morrison & Foerster:
Corporate: Dale Caldwell, David Lipkin, Jaclyn "Jackie" Liu, Brandon Parris, Kenneth Siegel, Ivan Smallwood, Robert Townsend, and Andrew Winden. Antitrust: Jeff Jaeckel and David Meyer. CFIUS: Nicholas Spiliotes. Tax: Bernie Pistillo and Eric Roose. Executive compensation: Michael Frank. Financial transactions: Peter Dopsch and Kathryn Johnstone. (Caldwell, Siegel, Smallwood, Winden, and Roose are in Tokyo; Liu, Parris, Townsend, and Pistillo are in San Francisco; Lipkin and Frank are in Palo Alto; Jaeckel, Meyer, and Spiliotes are in Washington, D.C.; Dopsch is in New York; and Johnstone is in Los Angeles.) MoFo and Mori Hamada & Matsumoto also advised Softbank on its $2.3 billion agreement to buy rival Japanese mobile carrier eAccess Ltd., a deal announced October 1, and MoFo represented Softbank as a shareholder of Alibaba Group Holding Limited when the Chinese Internet service provider agreed to buy back Yahoo! Inc.'s 40 percent stake in Alibaba earlier this year. Siegel began representing the company in the 1990s, when it invested in a number of Internet companies, including Yahoo.
Mori Hamada & Matsumoto:
Finance: Yoshifumi Kobayashi. (He is in Tokyo.) The firm took the lead on the $20 billion financing for the deal.
Corporate: Leonard Baxt. Communications: Christina Burrow, John Feore, J.G. Harrington, John Logan, and Michael Pryor. (All are in Washington, D.C.)
Potter Anderson Corroon:
Corporate: Mark Morton, Michael Pittenger, and associate Pamela Millard. (All are in Wilmington.) MoFo's Lipkin tapped Potter as Delaware counsel. Sprint will be reincorporated in Delaware as part of the deal.
Corporate: William Wood II and associate Francis Baalman. (Both are in Wichita.) Sprint Nextel is incorporated in Kansas.
For target Sprint Nextel Corporation (Overland, Kansas)
General counsel Charles Wunsch, senior counselM&A Todd Barfield and Michael Ragsdale, senior counselsecurities and governance Stefan Schnopp, counselsecurities and governance Aisha Reynolds and Katie True-Awtry, senior vice presidentgovernment affairs Vonya McCann, vice presidentsales and distribution Michael Allen, vice presidentintellectual property Harley Ball, vice presidentcorporate transactions and business John Chapman, vice presidentlitigation Susan "Sue" Haller, and vice presidentsecurities and governance Timothy "Tim" O'Grady.
Skadden, Arps, Slate, Meagher & Flom:
M&A: Thomas Kennedy and Jeremy London. Corporate finance: Yossi Vebman. Banking: Stephanie Teicher. Antitrust: Steven Sunshine and Matthew Hendrickson. Executive compensation and benefits: Regina Olshan. Tax: Dean Shulman. CFIUS issues: Ivan Schlager. Telecommunications law: Antoinette "Toni" Cook Bush. (All are in New York, except for Washington, D.C.based London, Sunshine, Schlager, and Cook Bush.) Skadden represented Sprint last year in its opposition to AT&T's proposed acquisition of T-Mobile, a deal the parties abandoned in the face of opposition from the U.S. antitrust authorities.
Lawler, Metzger, Keeney & Logan:
Telecommunications: Regina "Gina" Keeney, Charles "Buck" Logan, and A. Richard Metzger Jr. (All are in Washington, D.C.)
Corporate finance: William Mahood III and associates Joseph Jarvis and Eric Wu. (All are in Kansas City, Missouri.) Mahood left thenSprint Corporation legal's M&A group in 2000. He has represented the group since then as outside transactional and Kansas counsel.
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The U.S. Department of Justice foiled Deutsche Telekom AG's planned sale of T-Mobile USA to AT&T Inc. last fall. On October 3, almost a year after that deal collapsed, Deutsche Telekom announced an agreement to merge its U.S. cell phone division with MetroPCS Communications Inc. The combined company, which will retain the T-Mobile name, would have about 42 million subscribers and be the fourth-largest cell phone carrier in the United States after AT&T, Verizon Communications Inc., and Sprint Nextel Corporation.
Deutsche Telekom and MetroPCS are employing a complicated structure to effect the transaction. MetroPCS will declare a 1-for-2 reverse stock split, pay $1.5 billion in cash to its shareholders, and will then acquire all of T-Mobile's common stock in exchange for a 74 percent stake in the new T-Mobile, which MetroPCS CEO John Legere will continue to run. The companies hope to close the deal in the first half of 2013 pending approvals from regulators and MetroPCS shareholders.
For acquiror Deutsche Telekom AG (Bonn)
At Deutsche Telekom: general counsel Claudia Junker, senior vice presidentpublic and regulatory affairs Wolfgang Kopf, vice presidentM&A and joint ventures Axel Lützner, and head of competition law, public policy, and regulatory affairs Volker Stapper. At T-Mobile USA: general counsel David Miller, deputy general counsel Lauren Venezia, vice presidentgovernment affairs Thomas Sugrue, and vice presidentfederal regulatory affairs Kathleen Ham.
Wachtell, Lipton, Rosen & Katz:
Corporate: Adam Emmerich and associates Valentina Cassata, DongJu Song, and Mark Stagliano. Finance: Eric Rosof and associates Neil Chatani and John Sobolewski. Tax: Jodi Schwartz, T. Eiko Stange, and associate Tijana Dvornic. Executive compensation and benefits: Michael Segal and associate Timothy Moore. Antitrust: Ilene Knable Gotts and associate Lori Sherman. (All are in New York.) Wachtell also represented Deutsche Telekom on the AT&T deal, as did Cleary Gottlieb Steen & Hamilton and Wiley Rein [Deals & Suits, July 2011]. Wachtell represented VoiceStream Wireless Inc. when it was sold to Deutsche Telekom in 2001.
Cleary Gottlieb Steen & Hamilton:
Antitrust: George Cary, Mark Nelson, and associates Patrick Bock and Robert Devine. Tax: Yaron Reich, Leslie Samuels, and associate Corey Goodman.??(The antitrust lawyers are in Washington, D.C.; the tax lawyers are in New York.)
M&A: Margaret Inouye and associates Elisabeth McNeil and Eric Taylor. Antitrust: Ramona Emerson, of counsel Richard Price, and associate Christopher Wyant. (All are in Seattle, except for Portland, Oregonbased Price.) The firm was counsel to Western Wireless Corporation from its formation in 1988 and to VoiceStream from its spin-off from Western Wireless in 1994. Western Wireless used Wachtell on its 2005 sale to Alltel Corporation.
Telecommunications: Nancy Victory and Richard Wiley. (Both are in Washington, D.C.)
For target MetroPCS Communications Inc. (Richardson, Texas)
General counsel Mark Stachiw and assistant general counsel Melanie Stapp Klint.
Gibson, Dunn & Crutcher:
Corporate: Jeffrey Chapman, Robert Little, and associate Travis Souza. Finance: Joerg Esdorn, Darius Mehraban, and associate Stewart Ross. Tax: David Sinak. Employee benefits and executive compensation: David Schiller and associate Krista Hanvey. Antitrust: M. Sean Royall and associate Adam Di Vincenzo. Technology: Stephan Nordahl and associate Daniel Angel. (All are in Dallas except for the following: Esdorn, Mehraban, Ross, Nordahl, and Angel are in New York; and Di Vincenzo is in Washington, D.C.) Chapman represented the company in 2005 when Madison Dearborn Partners LLC and TA Associates Inc. made a $600 million investment in MetroPCS. At the time Chapman was a partner at Vinson & Elkins. He moved to Gibson Dunn last year.
Antitrust: C. Scott Hataway and associates Noah Pinegar and Michael Wise. (All are in Washington, D.C.) MetroPCS general counsel Stachiw once practiced at the firm, which helped advise MetroPCS on its failed bid for Leap Wireless International Inc. Hataway joined Paul Hastings last year from Howrey.
Telecommunications Law Professionals:
Telecommunications: Michael Lazarus, Andrew Morentz, and Carl Northrop. (All are in Washington, D.C.) The group worked with MetroPCS when they were at Paul Hastings. They started their own firm last year.
For MetroPCS board of directors
Akin Gump Strauss Hauer & Feld:
Corporate: Robert Dockery, J. Kenneth Menges Jr., and associate Adam Hilkemann. (All are in Dallas.)
Fulbright & Jaworski:
Litigation: Karl Dial and Brett Govett. (Both are in Dallas.)
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UnitedHealth Group Incorporated expanded into South America by agreeing on October 8 to pay $4.9 billion for a 90 percent stake in Amil Participações S.A., Brazil's largest health care company. Amil founder and CEO Edson Bueno and partner Dulce Pugliese, Amil's controlling shareholders, will retain a 10 percent stake in the company but will sell 60 percent to UHG, which will buy another 30 percent of Amil from public shareholders.
UHG will pay $4.3 billion for the stock and gain another $600 million in tax benefits. Bueno will stay on as Amil's CEO and will join UHG's board. He also promised to invest about $470 million in UnitedHealth stock that he will hold for five years. UHG hopes to complete the purchase of Bueno and Pugliese's stake by December and buy the public shares in the first quarter of 2013, pending regulatory and shareholder approval.
For acquiror UnitedHealth Group Incorporated (Minnetonka, Minnesota)
Chief legal officer Richard Baer, senior deputy general counselsecurities Richard Mattera, senior deputy general counsel Kuai Leong, senior associate general counsel Jake Tyshow, and associate general counsel Michael Molepske.
Sullivan & Cromwell:
M&A: Sergio Galvis and Keith Pagnani. Tax: Ronald Creamer Jr. FCPA: Theodore Edelman. Executive compensation and benefits: special counsel Rebecca Coccaro. Securities: William Farrar. Antitrust: Juan Rodriguez and special counsel Eric Queen. Arbitration: Joseph Neuhaus. Environmental: special counsel Matthew Brennan. (All are in New York, except for Washington, D.C.based Coccaro and London-based Rodriguez.) Pagnani sat across the table from UHG in 2004 when it bought Oxford Health Plans Inc. of New York for $4.9 billion. A few months later, Michael McDonnell, general counsel of UHG subsidiary UnitedHealthcare, tapped Pagnani for the $500 million purchase of John Deere Health Care Inc. Pagnani went on to advise UHG in its acquisition of Arnett Health Plans Inc. in 2006; in its $2.6 billion purchase of Sierra Health Services Inc. in 2007; and on the purchase of XL Health Group Inc., which was announced in November 2011 and closed in February.
Pinheiro Neto Advogados:
M&A: Carlos Alberto Moreira Lima Jr. and associates Pythagoras Carvalho and Mariana Alonso Tomazelli. Capital markets: Henrique Silva Gordo Lang and associate Guilherme Sampaio Monteiro. Litigation and regulatory: Théra van Swaay De Marchi and Gilberto Giusti. Tax: Giancarlo Chamma Matarazzo. Labor: Luís Antônio Ferraz Mendes. (All are in São Paulo.)
For target Amil Participações S.A. (Rio de Janeiro)
General counsel Henrique Freire de Oliveira Souza and attorneys Geny Guedes de Queiroz Van Erven and Márcio Alexandre Salvador.
Corporate and finance: Sérgio Machado, Carlos Barbosa Mello, and associates Mirella Mie Abe, Lucas Baptistella, Rafael Erlinger, and Gabriel Silva. Tax: Gustavo Lian Haddad and associate Gustavo Paes. Labor and employment: counsel Mariá Guitti. (All are in São Paulo.) LeFosse also represented the company on its 2007 IPO.
M&A: Alberto Luzarraga and associates Peter Cohen-Millstein, Gabriel Silva, and Thomas Wright. Tax: Gordon Warnke and counsel Francisco Duque. Antitrust: associate Antonia Sherman. (All are in New York.) Linklaters is affiliated with LeFosse.
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Occidental Petroleum v.
Republic of Ecuador
In what is by far the largest award ever granted under an investment treaty between nations, Occidental Petroleum Corporation has won roughly $2.3 billion in damages and interest in a dispute with Ecuador. In a 336-page ruling released October 5, an arbitration panel of the International Centre for Settlement of Investment Disputes found that Ecuador improperly expropriated Occidental's oil drilling rights in 2006.
In 1999 Ecuador granted an Occidental affiliate the exclusive rights to drill for oil in an area called Block 15. The next year Occidental entered into a "farm out" agreement with a Canadian company to share the expenses and profits over four years. At the end of that period, Occidental would transfer title to the drilling rights to the Canadian company, subject to government approval. When Occidental asked for that approval, Ecuador refused, instead canceling Occidental's drilling contract. Ecuador claimed that Occidental had breached the agreement by transferring rights to the Canadian company before getting the government's approval, among other things.
Occidental filed its claim with the ICSID in 2006, asserting more than $3 billion in damages, and claiming that Ecuador had violated domestic and international law, as well as a treaty between the United States and Ecuador governing the protection of investments in each country. Ecuador claimed that the tribunal did not have jurisdiction, but the tribunal held otherwise in a ruling in 2008.
In the most recent ruling, the tribunal found that Occidental had incurred damages of $2.3 billion, but reduced that award by 25 percent, because the oil company had failed to get Ecuador's approval before entering into the agreement with the Canadian company. Prejudgment interest brings the total back up to $2.3 billion.
Ecuador filed a request for an annulment proceeding on October 11.
For claimant Occidental Petroleum Corporation (Los Angeles) et al.
Executive vice president and corporate secretary Donald de Brier and senior assistant general counsel Laura Abrahamson. De Brier was the general counsel of Occidental from 1993 to 2012.
Debevoise & Plimpton:
David Rivkin and associates Bethany Davis Noll, Marjorie Menza, Claudio Salas, Marco Serrano, Suzanne Spears, and Shane Spelliscy. (Rivkin and Davis Noll are in New York; the rest have left the firm.) Debevoise has represented Occidental since 2001.
Covington & Burling:
Gaëtan Verhoosel and associate Carmen Martinez Lopez. (They are in London.) The firm was cocounsel; Verhoosel and Martinez Lopez were at Debevoise when the matter was filed.
For respondent The Republic of Ecuador
Attorney General of Ecuador Diego García Carrión.
Stephen Anway and George von Mehren. (Anway is in New York and Cleveland; von Mehren is in London and Cleveland.) Neither counsel for Ecuador commented further.
Pierre Mayer and Eduardo Silva Romero. (They are in Paris.) The firm has previously represented Ecuador in a series of treaty disputes brought by investors and arbitrated under ICSID rules.
For the Tribunal of the International Centre for Settlement of Investment Disputes (Washington, D.C.)
L. Yves Fortier, Brigitte Stern, and David Williams. (Fortier is in Montreal; Stern is in Paris; and Williams is in Auckland, New Zealand.)
Susan Beck, with Tom Coster
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In Re UBS Securities Litigation
A judge for the Southern District of New York on September 28 dismissed a long-running shareholder class action against Swiss bank UBS AG and bank underwriters of a 2008 UBS securities offering. Judge Richard Sullivan found that the plaintiffs, a group of pension and employee benefit funds, failed to show that UBS or any of its officers knowingly misled investors.
The case was one of the biggest to spill out of the financial crisis. In the complaint, filed in 2007 in the wake of the collapse of the mortgage-backed and auction-rate securities markets, the funds claimed that the bank duped investors about its portfolio of residential mortgagebacked securities and related debt, its exposure to the auction-rate securities market, and its potential liabilities for helping wealthy individuals dodge taxes. The funds alleged that they lost more than $110 billion as a result.
Judging by past securities class action settlements, which have historically averaged 24 percent of investor losses in the largest claims, according to a study by NERA Economic Consulting, UBS would have likely had to pay north of $500 million to make it all go away. Instead, the defense chipped away at the case until there was nothing left. In September 2011 the judge dismissed claims on behalf of U.S. and foreign shareholders who purchased their securities overseas, wiping out at least 80 percent of the case. Roughly a year later, a second ruling has taken care of the rest.
In granting the motion to dismiss, Sullivan said that the evidence before the court, even seen in a light most favorable to the plaintiffs, showed that UBS had been fairly transparent about its extensive exposure to the securities. He also said the funds hadn't established intent to deceive on the part of UBS or its directors and officers, as required by the Private Securities Litigation Reform Act's heightened standards for pleading securities fraud. Last, he ruled that any misrepresentations or omissions by UBS regarding its cross-border banking business weren't material.
For plaintiffs UBS Institutional Investors et al.
Kessler Topaz Meltzer & Check:
Andrew Barroway and Darren Check. (Check is in Radnor, Pennsylvania; Barroway has left the firm.) The firm was appointed colead counsel.
Grant & Eisenhofer:
Charles Caliendo, Geoffrey Jarvis, and James Sabella. (Caliendo and Sabella are in New York; Jarvis is in Wilmington.)
Gregg Levin, Donald Migliori, William Narwold, Joseph Rice, and counsel Ann Ritter. (Narwold is in Hartford; Migliori is in Providence; and the rest are in Mt. Pleasant, South Carolina.) The firm was colead counsel.
Robbins Geller Rudman & Dowd:
Evan Kaufman, David Rosenfeld, Robert Rothman, and Samuel Rudman. (Kaufman is in Melville, New York; the rest are in Manhattan.)
For defendant UBS AG (Zurich) et al.
At UBS Investment Bank Americas: director and counsel Karen Konigsberg and head of litigation Abby Meiselman.
Sullivan & Cromwell:
Maite Aquino, Robert Giuffra Jr., Suhana Han, Matthew Schwartz, Michael Wiseman, and associates Justin DeCamp and Thomas White. (They are in New York; Aquino died in June 2011.)
For defendant Deutsche Bank AG (Frankfurt) et al.
Simpson Thacher & Bartlett:
Barry Ostrager, Jonathan Youngwood, and associates Erin Bradrick and Elizabeth Gudis. (Bradrick has left the firm; the rest are in New York.)
S.B., with T.C.
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The Authors Guild Et Al. v.
HathiTrust Et Al.
The Authors Guild Inc. suffered a big blow on October 10 in its battle against the wholesale copying of copyrighted books by Google Inc. and its partners.
U.S. District Judge Harold Baer Jr. in Manhattan dismissed a suit by the Guild and its allies against the HathiTrust Digital Library, a massive digitization project involving Google and more than 60 university libraries. He ruled that the project's digital reproduction of millions of works is shielded from the authors' copyright claims.
The Authors Guild set its sights on HathiTrust and the universities last September after a different federal judge rejected a $125 million settlement in the parallel class action that the Guild and others brought directly against Google over its digitization efforts. The authors alleged that the HathiTrust project allowed Google "to back trucks up to university library loading docks" and scan every book for its own commercial use, not to mention for the unauthorized use of the universities themselves. By doing so, they claimed in their complaint, HathiTrust was violating copyright laws.
Judge Baer roundly disagreed, siding with HathiTrust and other groupsincluding the National Federation for the Blindwho argued that the character and functions of the digitization project fell squarely within the space carved out in copyright law for fair use. Among other arguments, HathiTrust asserted that the mass digitization would provide unprecedented access of the material to blind readers.
It's not clear what the dismissal means for the Guild's separate case against Google. At press time that case had been stayed by the U.S. Court of Appeals for the Second Circuit while the appellate court weighed Google's appeal of class certification for authors whose books Google has scanned.
For plaintiffs The Authors Guild Inc. (New York) et al.
Frankfurt Kurnit Klein & Selz:
Edward Rosenthal and associate Jeremy Goldman. (They are in New York.)
For defendant HathiTrust Digital Library (Ann Arbor, Michigan) et al.
At the University of Michigan: associate general counsel Jack Bernard and Bryce Pilz. At Indiana University: associate general counsel Jennifer Westerhaus Adams and M. Davis O'Guinn. At the University of California: deputy general counsellitigation, employment, and governance Karen Petrulakis and counsel Sunil Kulkarni and Mary McDonald. At the University of Wisconsin: system deputy general counsel Christopher Ashley and University of WisconsinMadison associate director and senior university legal counsel Nancy Lynch. At Cornell University: deputy university counsel and litigation section head Nelson Roth and corporate section head Patricia McClary.
Kilpatrick Townsend & Stockton:
Joseph Beck, Alex Fonoroff, Joseph Petersen, Ronald Raider, and associates Andrew Pequignot, Robert Potter, and Allison Roach. (Petersen and Potter are in New York; the rest are in Atlanta.)
David Bario, with T.C.
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TiVo Inc. announced a $250 million settlement with Verizon Communications Inc. on September 24. The dispute resolves one of several patent disputes over TV signal distributors' alleged unlicensed use of TiVo's "time-warp" patent, which covers technology that lets users record TV programs while watching another program at the same time.
TiVo alleged in a suit filed in August 2009 that TV signal distributors were providing set-top playback of recorded programming to their customers based on TiVo's technology without paying TiVo a licensing fee. The case had been scheduled to go to trial in October in federal district court in Marshall, Texas.
Verizon's settlement with TiVo, which calls for a $100 million up-front payment followed by quarterly installments until 2018, is similar to a $215 million settlement TiVo struck with AT&T Corporation in January.
At press time TiVo had similar pending patent suits in East Texas against Motorola Mobility LLC and Cisco Systems Inc. over their set-top boxes. The Motorola case is scheduled for trial in 2013.
For plaintiff TiVo Inc. (Alviso, California)
Senior vice president, general counsel, secretary, and chief privacy officer Matthew Zinn, vice presidentcorporate development David Fligor, and senior corporate counsel Jacob Feldman.
Irell & Manella:
Richard Birnholz, Morgan Chu, Andrei Iancu, Joseph Lipner, Samuel Lu, Ellisen Turner, Ben Yorks, counsel Babak Redjaian, Maclain Wells, and associates Douglas Fretty, Talin Gordnia, Joshua Gordon, Xinlin Li, Melissa Sedrish Rabbani, Priyanka Rajagopalan, and Thomas Werner. (Yorks and Redjaian are in Newport Beach, California; the rest are in Los Angeles.) The firm has represented TiVo in three trials, four trips to the U.S. Court of Appeals for the Federal Circuit, and three settlements and a judgment related to the "time warp" patent that have gleaned almost $1.1 billion for their client.
Robins, Kaplan, Miller & Ciresi:
Michael Collyard, Andrea Gothing, Cyrus Morton, Ronald Schutz, David Swenson, and associates Peter Routhier and Brock Specht. (Schutz is in Minneapolis and New York; the rest are in Minneapolis.)
Samuel Baxter, Garret Chambers, and John Franklin Garvish. (Baxter is in Marshall, Texas; Chambers is in Dallas; and Garvish is in Austin.)
For defendant Verizon Communications Inc. (New York)
Vice president and associate general counsel Gail Levine.
Kellogg, Huber, Hansen, Todd, Evans & Figel:
Courtney Elwood, Joseph Hall, Michael Kellogg, and John Rozendaal. (They are in Washington, D.C.)
Jan Wolfe, with T.C.