Simpson Thacher & Bartlett’s corporate lawyers grabbed a spot across the negotiating table from longtime client KKR on Monday, advising private equity rival Hellman & Friedman on the $2.3 billion sale of insurance claims processor Sedgwick Claims Management Services.
It’s the second major insurance industry acquisition for KKR in five months. The Am Law Daily reported in September on Simpson’s role advising KKR on its $1.1 billion buy of property claims software company Mitchell International from private equity firm Aurora Capital Group.
But while some law firms have tried to encroach on Simpson’s ties to New York–based KKR, it seems only the firm’s ties to another key private equity client—in this case San Francisco–based Hellman & Friedman—prevented Simpson from landing yet another deal for the buyout giant.
Chad Skinner, a corporate specialist elected to Simpson’s partnership ranks in 2007, is leading a team from the firm representing Hellman & Friedman and fellow private equity firm Stone Point Capital on Sedgwick’s sale to KKR. The sellers bought Sedgwick for $1.1 billion three years ago from Fidelity National Financial and other investors.
Debevoise & Plimpton took the lead for Stone Point and Hellman & Friedman on the completion of that deal in June 2010, the same month that Sedgwick hired Jason Hood as its new chief legal officer. Dewey & LeBoeuf partners Robert Rachofsky and Gary Boss advised Sedgwick on the matter, according to an SEC filing at the time, and now the company’s private equity owners are unloading it to KKR.
Rachofsky joined Willkie Farr & Gallagher in early 2012 after the latter firm poached Dewey’s insurance practice. (Boss left soon-to-be-defunct Dewey to join Magic Circle Clifford Chance that same year.) As it happens, Willkie employee benefits partner Jordan Messinger, corporate and financial services partner Thomas Mark and associates Delano Ladd and Geri Anne McEvoy are currently advising Sedgwick management on the company’s sale to KKR.
While Simpson has been KKR’s primary outside legal adviser on transactional matters, other Am Law 100 firms have jumped in to advise the buyout giant, often when Simpson has a conflict. The Am Law Daily reported in October on Kirkland & Ellis’ role advising KKR on its $1 billion acquisition of two industrial products businesses from British manufacturer Melrose Industries, which turned to Simpson for counsel on the deal. The transaction came a month before Kirkland poached Simpson corporate partner Sean Rodgers in New York, according to our previous reports. (Kirkland also advised Accel-KKR, a joint venture between the private equity firm and venture capital shop Accel Partners, earlier this month on its $514 million sale of Kana Software to Verint Systems.)
Latham & Watkins, a firm whose own KKR’s connections helped it expand beyond its Los Angeles base into a national powerhouse, is handling the Sedgwick deal for KKR. The American Lawyer reported in a 2005 feature story that Latham’s ties to key clients like KKR were one reason behind its success in expanding beyond its Los Angeles base to the highly competitive New York market, a move that helped it become a national powerhouse.
Edward “Ted” Sonnenschein Jr., a senior Latham corporate partner and chair of the firm’s strategic initiatives committee and cochair of its emerging companies group, took the lead for KKR two years ago on its acquisition of insurance brokerage firm Alliant Insurance Services from private equity firm The Blackstone Group, which turned to Simpson for counsel on the deal. Latham and Sonnenschein also advised KKR on its $1.1 billion buy of Capital Safety in late 2011, a deal that saw Simpson take the lead for private equity seller Arle Capital Partners.
With Simpson on hand for Sedgwick’s soon-to-be-former private equity owners, KKR turned to Sonnenschein to lead a Latham team to handle its end of the acquisition. Other Latham lawyers currently working on the matter for KKR include corporate partners David Kurzweil and Stephen Amdur, finance partners Jeffrey Chenard and Manu Gayatrinath, tax partner David Raab, employee benefits partner David Della Rocca, insurance partner Peter Rosen and counsel Alexandra Roje and antitrust partner Marc Williamson and counsel Sydney Smith.
KKR’s purchase of Sedgwick is expected to close in the first quarter of this year. The deal was announced the same day that KKR cofounder Henry Kravis was elected chairman of the board for Sponsors for Educational Opportunity (SEO), a New York–based nonprofit that helps low-income public high school students prepare for college. Simpson states on its website that the firm has remained active with SEO for several years.
Simpson’s ties to KKR remain strong. Last week the firm handled KKR’s $5.8 billion acquisition of South Korea’s Oriental Brewery, and the firm teamed up with Debevoise in December to advise KKR portfolio company US Foods on its proposed $3.5 billion cash-and-stock sale to Sysco, a deal that will likely receive close regulatory scrutiny. Simpson also recently handled KKR’s acquisition of debt-trading affiliate KKR Financial Holdings, as well as its $200 million buy of a minority stake in India’s Gland Pharma and purchase of a similar stake in Malaysia’s Weststar Aviation Services.
Stanford Law School professor and former SEC Commissioner Joseph Grundfest serves as an independent member of the board at KKR, whose cofounder and cochair George Roberts is one of the nation’s wealthiest individuals to have attended law school. KKR’s general counsel is David Sorkin, a former Simpson M&A partner who was hired as the private equity firm’s first in-house legal chief in 2007.
Other Simpson lawyers advising Hellman & Friedman and Stone Point on their sale of Sedgwick to KKR include finance partner Brian Steinhardt, employee benefits partner David Rubinsky, tax partner Katharine Moir, IP transactions counsel Joshua Walker and associates Dena Acevedo, Jonathan Amt, Thomas Asmar, Michelle Lyon, Jacob Mayers and Noah Metz.
Hellman & Friedman’s managing director and general counsel is Arrie Park. David Wermuth serves as senior principal and general counsel for Greenwich, Conn.–based Stone Point, whose chairman is former Goldman Sachs executive Stephen Friedman, a lawyer and onetime economic adviser to President George W. Bush.
U.S. Senate records show that Stone Point paid $10,000 last year to Ogilvy Government Relations for federal lobbying work. KKR maintained a more robust presence on Capitol Hill, paying $600,000 in 2013 to Akin Gump Strauss Hauer & Feld, according to Senate filings.
In December, former Akin Gump partner Kenneth Mehlman, who joined KKR in 2008 to head its government affairs unit, was named to lead the Private Equity Growth Capital Council, the main lobbying group for the leveraged buyout industry in Washington, D.C. Senate lobbying records reveal that last year the Private Equity Growth Capital Council paid $440,000 to Akin Gump, $360,000 to Debevoise and $190,000 to Blank Rome Government Relations.
It’s not just the lobbyists that have staying busy for private equity clients. The Am Law Daily reported last week on a dozen Am Law 100 firms that have landed roles on a spate of deals announced so far this year in the insurance sector. Last week Debevoise advised U.S. insurer Assurant on its $115 million equity investment in Mexico City–based assistance service company Ike Asistencia.