UPDATE: 9/4/13, 10:30 a.m. EDT. The names of the lawyers from Hogan Lovells advising Vodafone on FCC matters have been added to the 10th paragraph of this story. 9/4/13, 5:30 p.m. EDT. Cooley’s role advising Nokia’s CEO Stephen Elop has been added to the 30th paragraph.
At least a dozen big firms are advising on two major M&A deals in the telecommunications sector: Microsoft’s $7.2 billion buy of Nokia’s mobile phone business and the $130 billion acquisition by Verizon Communications of joint venture partner Vodafone Group’s 45 percent stake in Verizon Wireless.
Simpson Thacher & Bartlett has landed roles on both transactions—the latter of which is the third-largest M&A deal in history—for clients Vodafone and Microsoft. The two deals, which Reuters reports have pushed M&A activity in the telecom sector to its highest level since 2006, are prominent feathers in the transactional cap of Simpson’s M&A group, which like many Wall Street firms was hit hard by the global financial crisis and the demise of key clients like Bear Stearns and Lehman Brothers.
Legal fees from the two transactions will be robust, as an array of asset transfers and regulatory hurdles necessary to close both deals will provide opportunities for additional legal work, according to lawyers familiar with high-profile M&A matters who spoke with The Am Law Daily on the condition of anonymity.
As a matter of comparison, legal fees related to commodities giant Glencore International’s $41 billion acquisition last year of Swiss mining company Xstrata hit more than $60 million, according to data compiled by British publication The Lawyer. A change made to the U.K.’s takeover rules in 2011 requires the disclosure of fees paid to bankers, lawyers, and public relations professionals following the completion of deals by publicly owned companies in the country.
While The Lawyer reported last month that legal fees on public M&A deals in the U.K. had plummeted during the first half of 2013, publicly owned Vodafone figures to provide a substantial increase to any quarterly fee tabulation once the sale of its stake in Verizon Wireless closes in early 2014. The British telecom giant will receive $58.9 billion in cash and $60.2 billion in shares from Verizon to cede control of Verizon Wireless, the largest mobile network operator by subscribers in the United States.
As for Microsoft, the world’s largest software company will pay roughly $5 billion to Nokia for all of its devices and services division, which includes its smartphone business, and nearly $2.2 billion for patents held by the struggling Finnish cell phone maker. Microsoft will also take on 32,000 employees from Nokia, which has fallen behind Apple, Samsung, and Google in mobile market share.
M&A partners William Curbow and Eric Swedenburg are leading the Simpson team counseling Vodafone on its exit from U.S. mobile venture Verizon Wireless that also includes executive compensation and employee benefits partner Gregory Grogan, senior tax partner Steven Todrys, banking and credit practice head Patrick Ryan, securities partner John Lobrano, and antitrust and regulatory partner Peter Thomas, the managing partner of the firm’s office in Washington, D.C. (Grogan, elected partner at Simpson in 2006, who also worked on the deal team representing Microsoft, declined to comment about his roles on both big telecom transactions when contacted Tuesday by The Am Law Daily.)
Simpson’s Curbow previously advised Vodafone, the world’s second-largest telecom company behind China Mobile, when Verizon Wireless spent $28.1 billion in 2008 to buy regional U.S. carrier Alltel in another major M&A deal that yielded roles for a half-dozen Am Law 100 firms, according to our previous reports. Simpson also beat out Sullivan & Cromwell a decade ago to advise Vodafone on its unsuccessful $30 billion bid to buy AT&T’s wireless unit, which was sold for $41 billion to Cingular Wireless in 2004. Cingular, a joint venture of two Baby Bells, adopted the AT&T Mobility name in 2007 following SBC’s $16 billion acquisition of the original AT&T.
Vodafone, which shook up its outside legal panel in September 2011, tapped corporate partners Roland Turnill, Nigel Boardman, and Craig Cleaver from Magic Circle firm Slaughter and May for U.K. deal counsel related to its sale of Verizon Wireless. Linklaters has traditionally done deal work for Vodafone, having taken the lead on the company’s $10.1 billion bid for Kabel Deutschland earlier this year, as well as Vodafone’s nearly $1.1 billion buy of Cable & Wireless Worldwide in 2012, $11.3 billion sale of a 44 percent stake in Paris-based cell phone service provider SFR in 2011, and $620 million sale two years ago of a 5.5 percent stake in Indian mobile operator Vodafone Essar.
Hogan Lovells communications partners Michele Farquhar and Ari Fitzgerald are serving as FCC counsel to Vodafone on the sale of its stake in Verizon Wireless. The deal is the largest by Vodafone since its mammoth $173 billion acquisition of Germany’s Mannesmann AG in 2000. Only AOL’s $182 billion cash-and-stock merger with Time Warner that same year—an ill-fated arrangement that netted $35 million for Cravath, Swaine & Moore before it was unwound four years ago—also trumps in size the $130 billion announcement by Vodafone on Monday.
Basking Ridge, New Jersey–based Verizon Wireless, once known as the Cellco Partnership, was formed in 2000 through a convoluted series of multibillion-dollar telecom deals in the U.S. and Europe. In January 2009 Debevoise & Plimpton advised Verizon Wireless on the completion of its $28.1 billion purchase of Little Rock–based Alltel, which was advised by Wachtell, Lipton, Rosen & Katz.
This week sees Wachtell make its dealmaking debut for New York–based Verizon, as the firm is currently handling its first-ever deal for the company as it takes full control of Verizon Wireless. Leading a team from the firm serving as M&A counsel to Verizon are corporate partners Daniel Neff and Steven Rosenblum, antitrust partner Ilene Gotts, executive compensation partner Michael Segal, restructuring and finance partners Eric Rosof and Joshua Feltman, and associates Richard Barbour II, Franco Castelli, Victor Goldfeld, Emily Johnson, Caith Kushner, Sara Lewis, Kate Napalkova, John Robinson, Sehj Vather, and Peter Zuckerman.
British firm Macfarlanes is advising Verizon on M&A issues in the U.K. through senior partner Charles Martin and corporate partner Graham Gibb. Verizon is also receiving Dutch legal counsel from Jones Day M&A partner Marc Rijkaart van Cappellen and tax partner Lodewijk Berger in Amsterdam. (Terms of the Verizon Wireless sale call for Verizon to sell a 23.1 percent minority stake in its Netherlands unit for $3.5 billion to Vodafone, which is being advised on that matter by Slaughter and May’s Dutch alliance firm De Brauw Blackstone Westbroek.)
Jeffrey Rosen, chair of the corporate department at Debevoise, is serving as debt finance and M&A counsel to Verizon, along with corporate partner Steven Slutzky, finance partner Michael Diz, tax partner Peter Furci, and associates Marina Copola, Morgan Hayes, Adam Kopald, and Philip Voss. Debevoise has enjoyed a long history of handling high-end transactional work for Verizon, with Rosen being named a Dealmaker of the Year by The American Lawyer in 2009 for his work on the Alltel acquisition, whose approval hinged in part on Debevoise’s subsequent representation of the company on its $5.25 billion sale of rural phone lines in 14 states to Frontier Communications.
Debevoise also counseled Verizon on an asset swap with AT&T four years ago after its Alltel deal closed, although Verizon stayed in-house earlier this year for another $1.9 billion wireless spectrum swap with AT&T. In 2007 Verizon tapped Debevoise for counsel on its $733.2 million acquisition of Rural Wireless, and the firm also represented Verizon last year on its $612 million acquisition of Hughes Telematics.
Davis Polk & Wardwell corporate partners Phillip Mills, Will Pearce, and Simon Witty, tax partner Jonathan Cooklin, and associate David Wilson are advising J.P. Morgan Securities and Morgan Stanley as financial advisers to Verizon. Both big banks are helping to arrange a $61 billion bridge loan for the company in order for it take control of Verizon Wireless. (Witty, Cooklin, and Pearce joined Davis Polk’s London office last year from Freshfields Bruckhaus Deringer and Herbert Smith Freehills, respectively.)
Weil, Gotshal & Manges M&A partners Matthew Gilroy and Thomas Roberts, the latter of which chaired the firm’s corporate department from 2000 to 2011 and currently serves as a member of Weil’s management committee, are representing another financial adviser to Verizon in Paul Taubman, who until late last year served as cohead of the institutional securities division at Morgan Stanley.
Randal Milch, who succeeded William Barr in 2008 as executive vice president of public policy and general counsel for Verizon, is leading a team of in-house attorneys from the company working on the deal that includes senior vice president and deputy general counsel for regulatory affairs Michael Glover, deputy general counsel and corporate secretary William Horton, associate general counsel of strategic transactions J. Goodwin Bennett, and deputy general counsel for corporate taxes William Van Saders. William Petersen serves as general counsel for Verizon Wireless, but wasn’t involved in the deal due to his obligations to both parent companies.
Hugh Price, a former senior adviser at DLA Piper, serves as an independent member of Verizon’s board of directors, along with former Treasury Department secretary and current Patton Boggs government relations and lobbying partner Rodney Slater.
Former Mayer Brown partner Rosemary Martin, who became general counsel of Newbury, England–based Vodafone in 2010 after stepping down as the top in-house attorney at Reuters, did not respond to a request for comment about the names of her company’s in-house legal advisers.
The boards of both Verizon and Vodafone have approved the Verizon Wireless transaction, which will require the additional approvals of shareholders and regulatory authorities in order for it to be completed by the first quarter of next year.
The timeframe is the same for Microsoft’s proposed purchase of Nokia’s mobile phone division, a deal expected to close in the first three months of 2014 pending shareholder and regulatory approvals.
Microsoft’s bid to purchase Nokia’s struggling cell phone unit is part of an effort to keep up with competitors in the fast-growing mobile market, according to The Wall Street Journal. (In 2011 Google made a big play in the mobile device market with its $12.5 billion acquisition of Motorola.) Apple cofounder Steven Wozniak publicly claimed that Microsoft had rested on its laurels by failing to innovate after Steven Ballmer, the company’s outgoing CEO, took over from cofounder Bill Gates.
Alan Klein, an M&A expert and coadministrative partner with Simpson in New York, is leading a team of lawyers from the firm representing Microsoft that includes the aforementioned Grogan, capital markets partner William Brentani, East Coast IP transaction head Lori Lesser, and tax partner Gary Mandel.
The American Lawyer named Klein one of its Dealmakers of the Year in 2012 for his role representing Microsoft on its $8.5 billion acquisition of Skype, the largest deal in the suburban Seattle-based company’s history. He also recently advised Microsoft on a cooperation agreement announced late Friday with San Francisco–based activist investor ValueAct Capital Management, which reportedly pressed for Ballmer’s ouster but wasn’t consulted on the company’s big Nokia deal. (ValueAct’s chief compliance officer and general counsel is Allison Bennington.)
Klein, who chaired the International Bar Association’s annual M&A conference this year, was part of a Simpson team that advised Microsoft on its ultimately unsuccessful $44.6 billion bid for Yahoo back in 2008. He declined to comment when contacted Tuesday by The Am Law Daily about the labor put in by Simpson lawyers in the transactional tech space over Labor Day weekend.
In addition to Simpson’s M&A role on the Nokia deal, Microsoft is being advised on commercial, IP, and regulatory matters by Covington & Burling partners Ingrid Rechtin, Evan Cox, Miranda Cole, Louise Nash, Peter Swanson, Lisa Peets, and Bruce Deming, special counsel Matthew Edwards and Marie Lavalleye, and associates Bradley Chernin, Allison Kerndt, Matthew Kudzin, Anabel Lee, Benjamin Wiseman, and Robert Wu.
Covington is a longtime legal adviser to Microsoft. The Am Law Daily reported in June that the firm was advising the company on legal matters related to the National Security Agency’s data-mining programs. Microsoft general counsel Bradford Smith, a former Covington partner, wrote in a recent blog post that his company was working with archrival Google to push the federal government to make more disclosures related to its surveillance efforts.
Cadwalader, Wickersham & Taft antitrust head Charles “Rick” Rule, another longtime legal adviser to Microsoft and managing partner of his firm’s office in Washington, D.C., is once again serving as regulatory counsel to the company on its proposed purchase of Nokia’s mobile phone business. Microsoft has also retained firms in China, Finland, India, and Mexico for due diligence aspects of its deal with Nokia.
Nokia itself has turned to a team of lawyers led by Skadden, Arps, Slate, Meagher & Flom global corporate transactions cohead Kenton King. Other attorneys from the firm advising the Espoo, Finland–based company include corporate partners Michael Mies and Danny Tricot, IP partner David Hansen, tax partners Paul Oosterhuis and Eric Sensenbrenner, executive compensation partner Joseph Yaffe, antitrust partners Frederic Depoortere, Steven Sunshine, and Alec Chang, corporate counsel Jason Tomita, IP counsel James Brelsford and Carrie Leroy, and employee benefits counsel Helena Derbyshire and Kristin Davis, antitrust counsel Giorgio Motta.
Frederick Baron, chair of the labor and employment group at Cooley in Palo Alto, is advising Nokia CEO Stephen Elop on the deal along with compensation and benefits partner Thomas Welk and business and technology partner Samuel Livermore. Cooley previously advised Elop when he joined Nokia from Microsoft in 2010. Elop, who is now poised to step down from Nokia, has been mentioned as a potential replacement for Ballmer at Microsoft.
Louise Pentland serves as chief legal officer for Nokia, which has been busy on the M&A front in recent months as it transitions itself to a company focused on network infrastructure services, mapping and location services, and technology development and licensing.
In June The Am Law Daily reported on Shearman & Sterling’s role advising Nokia on its $2.2 billion acquisition of a 50 percent stake in network equipment joint venture Nokia Siemens Networks from the German electronics and engineering conglomerate. Skadden advised the joint venture in 2009 on its $650 million acquisition of wireless technology assets from bankrupt Nortel Networks.