Medtronic / Covidien
Medical-device maker Medtronic Inc. announced June 15 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 June 13, the last day of trading before the announcement.
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.
While Omar Ishrak, chairman and chief executive of Medtronic, denied 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, it has called upon Cleary Gottlieb Steen & Hamilton and Irish firm A&L Goodbody—both of which are well versed in this type of structure—for legal advice. Likewise, Covidien has turned to Wachtell, Lipton, Rosen & Katz; Skadden, Arps, Slate, Meagher & Flom; and Irish firm Arthur Cox, all of which have done extensive work with corporate inversions. The deal is contingent on the merged company’s ability to reincorporate outside the United States.
Cleary Gottlieb’s team on the deal includes M&A partners Victor Lewkow and Matthew Salerno; antitrust partners George Cary and Enrique González-Díaz; employment partner Arthur Kohn and counsel Caroline Hayday; finance partners Laurent Alpert and Meme Peponis; and tax partners Jason Factor and Yaron Reich. Associates Elaine Ewing, Corey Goodman, Matthew Mao, Neil Markel and Ruchit Patel are also involved in the deal.
A&L Goodbody’s team for Medtronic is led by M&A partners Alan Casey, Cian McCourt and Mark Ward. Corporate partner James Grennan, finance partner Séamus Ó Cróinín and tax partners Paul Fahy and Peter Maher are also involved.
In 2011, both Cleary Gottlieb and A&L Goodbody, along with Arthur Cox, advised on a different corporate inversion, this one involving a $960 million biotechnology merger between U.S.-based Alkermes and Ireland’s Elan Drug Technologies. The newly merged company moved to Ireland, taking Alkermes plc as its name.
Advising Covidien is a Wachtell deal team headed by corporate partners Adam Emmerich and Benjamin Roth. It also includes 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 are also working on the deal.
In 2009, Wachtell advised Covidien on its relocation to Ireland from Bermuda after spinning off from Tyco International Ltd. two years earlier. The firm also represented Covidien in a $2 billion spin-off of pharmaceutical unit Mallinckrodt Pharmaceuticals in 2011.
Skadden advised Covidien on the tax aspects of the deal. Its team includes tax partners Nathaniel Carden and Sally Thurston and associates Joseph Soltis and Chase Wink. The team from Arthur Cox advising Covidien was led by Brian O’Gorman and includes 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 and assistance from corporate partners Matthew Herman and David Sonter, finance partners Neil Falconer, Martin Hutchings and Brian Rance, and tax partner Robert Scarborough. Covidien’s financial adviser was Goldman, Sachs & Co.
Tyson / Hillshire
Tyson Foods Inc., one of the nation’s largest chicken processors, bested Pilgrim’s Pride Corporation on June 9 to acquire deli and packaged meat purveyor The Hillshire Brands Company with a sweetened offer of $7.7 billion, or $8.55 billion including debt.
In May, Hillshire, an offshoot of now-defunct consumer foods giant Sara Lee Corp., had been the target of a $6.4 billion takeover bid initiated by Pilgrim’s, a unit of Brazilian beef and poultry giant JBS. But Tyson swooped in shortly after Memorial Day with a $6.8 billion bid for Hillshire, which in mid-May had made a $4.3 billion offer of its own to acquire another company, Pinnacle Foods.
George “Gar” Bason Jr., global cohead of Davis Polk & Wardwell’s M&A group, is leading a team advising Tyson on the Hillshire deal. Other Davis Polk lawyers on the matter include senior corporate partner Arthur Golden, capital markets cohead Richard Truesdell Jr., corporate partner Marc Williams, finance partner Joseph Hadley, antitrust partner Ronan Harty, executive compensation partner Edmond FitzGerald, tax partner Neil Barr, litigation counsel Scott Luftglass and associates Harold Birnbaum, Derek Dostal and Lee Hochbaum.
Skadden, Arps, Slate, Meagher & Flom, which advised on the breakup of Sara Lee three years ago, has taken the lead for Hillshire on its dealings with Tyson, Pilgrim’s and Pinnacle. Rodd Schreiber, head of Skadden’s corporate practice in Chicago, is leading the team. Other Skadden lawyers working on the deal include corporate partners Michael Civale and Gregg Noel, banking partner Seth Jacobson, North American antitrust head Clifford Aronson, employee benefits partner Joseph Yaffe, environmental and climate change head Don Frost Jr., tax expert and global regulatory head David Rievman and IP partners Bruce Goldner and Kenneth Plevan.
Kent Magill is Hillshire’s general counsel. Hillshire assistant general counsel Alison Rhoten is a former Skadden counsel in Chicago.
In its pursuit of Hillshire, Pilgrim’s had turned to Cravath, Swaine & Moore corporate partners Scott Barshay and Damien Zoubek as outside counsel.
Pinnacle, which is 51 percent owned by The Blackstone Group, used Simpson Thacher & Bartlett, Blackstone’s longtime outside counsel. Simpson Thacher’s team included Daniel Clivner, managing partner of the Los Angeles office, along with employee benefits partner Gregory Grogan, capital markets partner Richard Fenyes, banking and credit partner Alden Millard, tax partner Gary Mandel, counsel Justin Hoffman and associates Mimi Cheng, Jennifer Pepin, Robert Smith and Justin Yi.
Time Inc. Spinoff
One of the country’s best-known media properties is heading out on its own. Time Inc., the nation’s largest publisher of consumer magazines, was spun off from Time Warner Inc. on June 9 as a standalone publicly traded company.
Time Warner was advised by Richard Hall and Eric Schiele of longtime outside counsel Cravath, Swaine & Moore, while the newly minted Time Inc. was advised by Kenneth Koch, a corporate partner in the New York office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. Time Inc.’s separation from its parent company was achieved by distributing shares to Time Warner shareholders, rather than through an initial public offering. The new company is listed on the New York Stock Exchange.
Fiber-optic network operators Level 3 Communications Inc. has tapped longtime outside counsel Willkie Farr & Gallagher for its proposed $5.68 billion acquisition of Internet business connection provider TW Telecom Inc., which is being advised by Wachtell, Lipton, Rosen & Katz. If approved, the purchase is expected to close in the fourth quarter of this year.
Willkie’s team on the deal is led by M&A cochair David Boston and corporate partner Laura Delanoy. Willkie has been a longtime legal adviser to Broomfield, Colo.-based Level 3, having handled its $3 billion all-stock acquisition of Global Crossing Limited in 2011. The company’s chief legal officer is John Ryan. As part of the deal, Level 3 will take on $1.6 billion in TW Telecom debt.
Wachtell corporate partner Steven Rosenblum is leading the team advising Littleton, Colo.-based TW Telecom, which was formerly known as Time Warner Telecom. Other Wachtell lawyers working on the deal include corporate partner Stephanie Seligman, antitrust partner Ilene Knable Gotts, executive compensation partner Adam Shapiro, restructuring and finance partner Joshua Feltman, tax partner Eiko Stange and associates Michael Sabbbah, Michael Schobel, Lisa Schwartz and Austin Witt. Philipp Dornbach, a senior associate with German firm Hengeler Mueller who is a visiting attorney at Wachtell, is also working on the acquisition.
Weil, Gotshal & Manges corporate partner Frederick Green and associates Christina De Vuono and Megan Pendleton are representing Evercore in its role as financial adviser to TW Telecom.
Former Mayer Brown partner Tina Davis is TW Telecom’s general counsel, succeeding Paul Jones, who retired last year. Former Time Warner deputy general counsel Spencer Hays is an independent member of TW Telecom’s board.
Apple / Beats
Apple Inc.’s $3 billion purchase of Beats Electronics is music to the ears of three Am Law 100 firms and London’s Osborne Clarke. The transaction, announced May 28, was unusual for Apple, which is known to prefer in-house development over big acquisitions. Before its bid for Beats Electronics, the largest M&A deal in Apple’s history was its $400 million purchase of Israeli flash memory storage firm Anobit Technologies, a transaction that Apple handled in-house.
For the Beats Electronics buy Apple turned to Kyle Krpata, an M&A partner in the Redwood Shores, Calif., office of Weil, Gotshal & Manges. Krpata, once one of the youngest attorneys to ever make partner at the firm, previously advised Apple in its involvement in a group that paid $4.5 billion for a patent portfolio from bankrupt Nortel Networks in 2011. A year later he handled Apple’s $325 million acquisition of mobile security firm AuthenTec.
Beats Electronics was founded in 2006 by record producer James Iovine and hip-hop mogul Andre Young, who is better known by his stage name, Dr. Dre. The company has two businesses: its headphones line, and an online music streaming service known as Beats Music.
Beats Electronics cofounders Dre and Iovine will join Apple as part of a deal that’s expected to close by year’s end, pending certain regulatory approvals. The $3 billion sum—which Dre appeared to celebrate in a video that went viral earlier this month, when reports of Apple’s interest in Beats Electronics first broke—consists of a $2.6 billion purchase price and another $400 million that will vest over time.
Brett Rodda, a corporate partner with Munger, Tolles & Olson in Los Angeles, and associates Jesse Creed and Sarah Graham are counseling the Beats Music business on the acquisition. Munger Tolles previously advised Beats Music on its acquisition of music subscription service Mog in 2012 and subsequent $60 million investment last year to turn the business, initially renamed Daisy, into Beats Music. Tyler Lenane is the general counsel of Beats Music.
Munger Tolles corporate partner Kevin Masuda and associates Jasmine Roberts, Mark Sayson and Andrew Wolstan are handling the headphones-business side of the sale to Apple. Masuda led a team from the firm last year advising Beats Electronics on a $500 million investment from The Carlyle Group, which helped the company buy back a 25 percent stake acquired by Taiwan’s HTC in 2011.
Jackson Rafferty, hired by Beats Electronics last year to become its general counsel as the company transitioned from an audio focus to providing peer-streaming services, is working with senior director Susan Chasnov on the transaction. Munger Tolles tax partner David Goldman, tax attorney Samuel Greenberg and employee benefits of counsel Williana Chang are advising Beats Electronics on its sale to Apple, as is Silicon Valley-based Osborne Clarke corporate partner Steve Wilson.
Brian McCarthy, a corporate partner and head of the Los Angeles office at Skadden, Arps, Slate, Meagher & Flom, is leading a team advising Iovine, Dre and other key Beats Electronics shareholders. Other Skadden lawyers working on the matter include corporate partner Andrew Garelick, executive compensation and benefits partner Joseph Yaffe and counsel Barbara Mirza, IP and technology partner Stuart Levi and counsel James Talbot, tax partner Kenneth Betts, labor and employment partner Karen Corman and associates Robert Frings and Matthew Hofheimer.