Five Firms Advise on Comcast’s $45 Billion Acquisition of Time Warner

One month after Time Warner Cable rejected a takeover bid as “grossly inadequate,” the nation’s second-largest cable company has attracted a better offer from a bigger buyer.

In a transaction officially announced last week, Time Warner has agreed to be purchased by Comcast, the country’s leading cable provider. The all-stock deal is valued at about $45 billion, or roughly $67 billion when assumed debt is tacked on.

Closing—which is expected to come by the end of the year, pending the approval of regulators and both companies’ shareholders—is no certainty. To consummate the deal, the country’s two largest cable providers will need to survive what is sure to be a rigorous regulatory approvals process. Comcast apparently expects a tough path to closing, as it began seeking advice about regulators’ potential objections to a deal in November, according to Reuters. The deal needs approval from the U.S. Federal Communications Commission, as well as either the U.S. Department of Justice or the Federal Trade Commission.

New York Senator Charles Schumer, who initially praised the deal, issued a statement Monday recusing himself from reviewing the agreement after an American Lawyer story named his brother, Robert Schumer, a partner atPaul, Weiss, Rifkind, Wharton & Garrison, as its “Dealmaker of the Week” for his involvement as an adviser to Time Warner. The senator sits on the U.S. Senate subcommittee on antitrust. A spokesman said the senator and his brother “had never discussed the matter before” and that the article in American Lawyer “was the first Senator Schumer learned that his brother had worked on the deal.”

Comcast has already moved to assuage antitrust concerns by saying it plans to divest roughly three million Time Warner subscribers right away to lower the number of subscribers it would acquire in the deal to eight million. Both companies have also been quick to insist that the deal “will not harm competition or reduce consumers’ choice in any way,” because, according to Comcast, the two companies “do not currently compete to serve customers in any zip code in America.” Comcast added that the combined company’s total U.S. market share of subscribers will remain under 30 percent.

In announcing the agreement, Comcast said the acquisition would generate roughly $1.5 billion in annual savings and increase the company’s subscriber base from 22 million to 30 million. Comcast said the deal will also improve its cloud computing offerings to businesses, while expanding its access to advertisers in certain key markets.

Under the deal’s terms, Time Warner shareholders will receive 2.875 Comcast shares for each of their Time Warner shares and, ultimately, a 23 percent ownership stake in Comcast. In order to offset price dilution resulting from the issuance of the new shares, Comcast said it plans to expand its share-buyback program by $10 billion once the Time Warner acquisition closes.

New York–based Time Warner had previously rejected a $61 billion offer from Charter Communications—an investment vehicle for billionaire John Malone’s Liberty Media that is the nation’s fourth-largest cable provider—that valued the target’s shares at $132.50 apiece.

In responding to that bid, Time Warner CEO Rob Marcus said his company would only consider a Charter takeover offer if came in closer to $160 per share. Philadelphia-based Comcast got there first, reaching an agreement that values Time Warner shares at $158.82 apiece—a 17.3 percent premium over Time Warner’s closing price the day before the announcement and a 19.9 percent premium over Charter’s bid.

Leading the way for Comcast is Davis Polk & Wardwell along with Willkie Farr & Gallagher.

The Davis Polk team includes New York-based corporate partnersDavid Caplan and William Chudd. Additional New York lawyers are antitrust partner Arthur Burke, tax partner Avishai Shachar, executive compensation partner Kyoko Takahashi Lin and intellectual property partner Frank Azzopardi. Capital markets partner Bruce Dallas is assisting from Menlo Park. Associates are Cheryl Chan, Gillian Emmett, Lee Hochbaum, Adam Perry and Christopher Utecht.

Willkie’s team, based in Washington, is led by communications practice chair Francis Buono and communications partner James Casserly. Communications special counsel Michael Jones and litigation partner David Murray are also advising, as are associates Mia Hayes, Michael Hurwitz, Michael Jones, Melanie Medina and Joshua Parker.

Arthur Block serves as Comcast’s general counsel.

Simpson Thacher & Bartlett is representing JP Morgan in its capacity as one of Comcast’s financial advisers. Corporate partner Robert Spatt is working on the deal with associates Ariel Oxman and Allen Pan. All are in New York.

As it was on the Charter bid, Time Warner is being represented by Paul, Weiss, Rifkind, Wharton & Garrison. Schumer, cohead of the firm’s M&A practice, is leading a team that includes M&A partnersAriel Deckelbaum and Ross Fieldston. All are in New York.

Skadden, Arps, Slate, Meagher & Flom M&A partnersStephen Arcano and Ann Beth Stebbins, both in New York, are also representing Time Warner.

Time Warner’s general counsel is Marc Lawrence-Apfelbaum.

Latham, Wachtell Lead on $25 Billion Drug Deal

Dublin-based generic drug maker Actavis said Tuesday it will buy Forest Laboratories in a $25 billion cash-and-stock deal that increases Actavis’ access to specialty pharmaceutical products.

Actavis has valued Forest at $89.48 per share, a 31 percent premium over Forest’s Friday closing price. Forest shareholders will own roughly 35 percent of the combined company once the deal closes, which is expected to occur sometime in mid-2014, pending the approval of regulators as well as both companies’ shareholders.

New York-based Forest makes specialty drugs used to treat a range of conditions that affect the central nervous system, as well as cardiovascular, gastrointestinal and respiratory diseases. The company also makes well-known antidepressant Lexapro and Alzheimer’s treatment Namenda. Actavis focuses primarily on producing and distributing generic drugs, but the company also currently generates roughly 30 percent of its revenues from North American specialty drug sales. Actavis said that the combined company can be expected to generate annual revenues of roughly $15 billion, with specialty drug sales representing roughly 50 percent of that total.

Actavis also expects the deal to produce roughly $1 billion in annual savings three years after the deal closes, including about $100 million in tax savings. The New York Times notes that the tax savings mostly result from the fact that Forest’s earnings will be subject to Ireland’s lower tax rates once it is owned by Actavis, which moved its headquarters to that country only last year with its $8.5 billion acquisition of generic rival Warner Chilcott. That deal allowed Actavis—then based in Parsippany, NJ—to reincorporate itself in Ireland in a process called corporate inversion that enables companies to take advantage of lower tax rates overseas.

Actavis has turned to its longtime advisers at Latham & Watkins on the Forest purchase. Latham’s corporate team is led by Orange County partners Scott Shean and Charles Ruck, along with New York partner Stephen Amdur. Additional New York lawyers are capital markets partner Wesley Holmes, finance partner Daniel Seale and associate Jesse Sheff. Partners in Los Angeles and Washington are benefits and compensation partner James Barrall and tax partners Laurence Stein and Nicholas DeNovio.

Actavis’ chief legal officer is David Buchen.

Skadden, Arps, Slate, Meagher & Flom antitrust partners Steven Sunshine in Washington and Ingrid Vandenborre in Brussels are advising Actavis on antitrust aspects of the deal, along with associate Maria Raptis in New York.

Forest has turned to Wachtell, Lipton, Rosen & Katz for legal advice on its sale to Actavis. All lawyers are in New York. Corporate partners Andrew Brownstein and Igor Kirman are leading team that includes executive compensation and benefits partner Jeremy Goldstein as well as restructuring and finance partners Eric Rosofand Gregory Pessin. PartnersJodi Schwartzand T. Eiko Stange are advising on tax matters. Wachtell associates Neil Chatani, Tijana Dvornic, Victor Goldfeld, Jeffrey Lee, Rohit Nafday, Francis Stapleton IV andElina Tetelbaum are also working on the deal.

Other firms to land roles on the deal include Fried, Frank, Harris, Shriver & Jacobson and Simpson Thacher & Bartlett. Fried Frank corporate partnersAbigail Pickering Bomba and Philip Richter, both in New York, are representing Greenhill & Co. in its role as financial adviser to Actavis. Simpson Thacher corporate partnerCaroline Gottschalk is leading an all-New York team from that firm—which also includes corporate partner Robert Spatt and associate Michael Holick—representing J.P. Morgan in its role as Forest’s financial adviser.