Seven Firms Advise on Medtronic’s $42.9 Billion Purchase of Covidien

By Vinayak Balasubramanian

In the latest, and perhaps largest, example of a U.S. company ditching its borders, medical device maker Medtronic Inc. announced Sunday it would purchase Dublin-based Covidien in a $42.9 billion deal that would move the combined company to Ireland.

The agreement calls for Medtronic to pay $35.19 in cash and 0.956 of a Medtronic share for each Covidien share—a 29 percent premium over the Irish medical device maker’s closing price on Friday.

Upon the deal’s completion, which is expected to happen in the last quarter of 2014 or in early 2015 pending approval by U.S. and European regulators as well as by shareholders at both companies, Covidien shareholders will hold 30 percent of the combined company.

Medtronic plans to keep its headquarters in Minneapolis even though it will reincorporate in Ireland.

Omar Ishrak, chairman and chief executive of Medtronic, denied to The New York Times that the company is entering the deal with Covidien as a way to reduce its tax obligations through what’s known as a corporate inversion. But it has called upon Cleary & Gottlieb and Irish firm A&L Goodbody, both of which are well-versed in this type of structure, for legal advice.

For its part, Covidien has turned to Wachtell, Lipton, Rosen & Katz; Skadden, Arps, Slate, Meagher & Flom and Irish firm Arthur Cox. All have done extensive work with corporate inversions.

Medtronic’s deal with Covidien imposes a condition that there be no legislative changes or Internal Revenue Service interpretation that would “cause New Medtronic to be treated as a U.S. domestic corporation for U.S. federal income tax purposes.” In other words, the transaction would be off if the company is unable to invert for legal reasons.

Those issues aside, Medtronic on Monday touted the advantages of a Covidien acquisition in an investor presentation, in which it said it expects to expand its global access and grow its product offerings. The combined company would increase Medtronic’s reach to 150 countries from 140 countries and nearly double its 2014 emerging market revenue to $3.7 billion from $2.1 billion.

Cleary’s legal team advising Medtronic on the proposed deal includes M&A partners Victor Lewkow and Matthew Salerno and associate Neil Markel; tax partners Yaron Reich and Jason Factor and associate Corey Goodman; finance partners Laurent Alpert and Meme Peponis and associate Matthew Mao; and employment partner Arthur Kohn and counsel Caroline Hayday. All are in New York. Assisting from Washington D.C., Brussels and London are several antitrust lawyers including partners George Cary and Enrique Gonzalez-Diaz and associates Elaine Ewing and Ruchit Patel.

A&L Goodbody’s legal team for Medtronic was led by M&A partners Cian McCourt, Alan Case and Mark Ward. Corporate partner James Grennan, finance partner Séamus Ó Cróinín and tax partners Paul Fahy and Peter Maher also assisted. All are in Dublin except McCourt, who is in New York.

Advising Covidien was an all-New York team from Wachtell headed by corporate partners Adam Emmerich and Benjamin Roth, that also included antitrust partner Nelson Fitts, corporate partner Victor Goldfeld, executive compensation and benefits partner Adam Shapiro, litigation partner Rachelle Silverberg, restructuring and finance partner Eric Rosof and tax partner Jodi Schwartz. Associates Franco Castelli, Tijana Dvornic, Emily Johnson, Andrew Kenny, Rohit Nafday, Michael Sabbah and Viktor Sapezhnikov worked on the case.

Skadden advised Covidien on tax matters. Its team includes tax partners Nathaniel Carden and Sally Thurston and associates Joseph Soltis and Chase Wink. All are in New York except Carden, who is in Chicago.

The Dublin-based team from Arthur Cox advising Covidien was led by Brian O’Gorman and included corporate partners Stephen Hegarty, Geoff Moore and Stephen Ranalow, as well as tax partner Fintan Clancy.

Representing Medtronic’s financial adviser Perella Weinberg Partners was Freshfields Bruckhaus Deringer, with a team led by New York-based corporate partner Doug Bacon. Additional New York attorneys are corporate partners Matthew Herman, finance partner Brian Rance and tax partner Robert Scarborough. Lawyers in London are corporate partner David Sonter, and finance partners Neil Falconer and Martin Hutchings.

Perella Weinberg also turned to a Dublin-based team from Matheson for legal advice, led by corporate partners George Brady, Tim Scanlon, and Patrick Spicer, and banking partner Libby Garvey.

Covidien’s financial adviser was Goldman, Sachs & Co.

S&C, Latham and Shearman Counsel Priceline’s $2.6 Billion OpenTable Buy

By MP McQueen

Priceline Group, the online travel booking service best known for its quirky ads featuring actor William Shatner, said Friday it has agreed to buy online restaurant-reservation service OpenTable.com for $2.6 billion in cash.

The boards of directors of both companies have approved the deal, which is expected to close in the third quarter subject to regulatory clearances, the companies said. At $103 per share, the purchase price represents a 46 percent premium over the closing price of OpenTable’s stock at the end of trading Thursday.

Founded in 1997, Norwalk, Conn.-based Priceline says it books more than 1 million guests per day in 480,000 properties in 200 countries. With the OpenTable acquisition, the company is adding restaurant reservations to a portfolio of travel- and lodging-focused properties that already includes Booking.com, KAYAK.com, Agoda.com in Asia and RentalCars.com.

San Francisco-based OpenTable, which was founded in 1998, says it helps some 15,000 diners per month make reservations in more than 31,000 restaurants. The company will continue to operate independently under its current management and in its existing headquarters, Priceline said.

“OpenTable is a great match for The Priceline Group. They provide us with a natural extension into restaurant marketing services and a wonderful and highly valued booking experience for our global customers,” Priceline Group president and CEO Darren Huston said in a company news release.

In his own statement, OpenTable CEO Matt Roberts said, “The Priceline Group is a leader in e-commerce innovation with global expertise in online marketing and digital customer conversion across devices, and they have an exceptional track record of customer service in dozens of languages around the world.”

Sullivan & Cromwell is advising Priceline. The firm’s team includes corporate partners Keith Pagnani and Brian Hamilton; tax partner Ronald Creamer, Jr.; intellectual property counsel Spencer Simon; executive compensation and benefits partner Matthew Friestedt; and antitrust partner Steven Holley, all of whom are based in New York. London-based antitrust partner Juan Rodriguez is also advising. Associates are Mimi Butler, Georg Krause-Vilmar and Andrew Rocks, all in New York.

Priceline’s in-house legal team is comprised of executive vice president and general counsel Peter Millones and senior vice president and associate general counsel Steve Sonne.

For its part, OpenTable is being represented by a Latham & Watkins team that is split between San Francisco and Silicon Valley. Leading the firm’s team are Patrick Pohlen, cochair of the firm’s emerging company practice; corporate partner Luke Bergstrom; and corporate partner Kathleen Wells who cochairs the Silicon Valley office’s corporate department. Other lawyers are tax partner Grace Chen, employee benefits partner Jay Metz, intellectual property partner JD Marple and antitrust partners Karen Silverman and Joshua Holian. Associates are Una Au, Heather Bromfield, Julie Crisp, William Hackett, Corinna Liebowitz, Chad Rolston, Arielle Singh and Matthew Van Leeuwen.

John Orta is OpenTable’s senior vice president and general counsel.

Shearman & Sterling also had a hand in the matter, advising Qatalyst Partners in connection with its role as OpenTable’s financial adviser. The Shearman team includes mergers and acquisitions partner Steve Camahort and associate Lisa Lopshire, both in San Francisco.