Christopher Mintz-Plasse as McLovin in the film Superbad. (Credit: Focus Features)
Have you actually ever met anyone named McLovin? Odds are, probably not, but you may have heard of mobile advertising technology start-up AppLovin Corp., named after the alter ego of Edward Fogell from the 2007 film “Superbad,” which on Sept. 26 announced plans to sell a majority stake to a Chinese private equity firm.
Fenwick & West snagged the lead role advising Palo Alto, California-based AppLovin on its $1.4 billion sale to Orient Hontai Capital in a deal expected to close before year’s end. The deal, as noted by technology news website ReCode, is a remarkable return for a mobile marketing platform co-founded in late 2011 by Adam Foroughi with just $5 million.
“Today is a great day for AppLovin. This level of investment validates the outstanding product we’ve built,” said a statement by AppLovin CEO Foroughi, who was reportedly inspired by the mythical McLovin years ago. “What’s more, is the profound significance for the entire advertising industry given this is the most sizeable outcome for a mobile advertising company ever.”
The so-called unicorn company never took traditional venture capital to get off the ground, instead relying on a $4 million angel investment from several Silicon Valley executives. By the end of its first year, AppLovin was already making more than $1 million a month in revenue.
Mountain View, California-based Fenwick & West, which began counseling AppLovin on a range of matters shortly after its formation, is currently advising the company on its proposed sale through corporate partners Kris Withrow, Ken Myers and Michael Esquivel, executive compensation partner Shawn Lampron and of counsel Mona Clee, IP partner Mark Ostrau and tax partner William Skinner.
Fenwick & West associates Elizabeth Chang, Sean Childers, Michael Knobler, Jonathan Millard, Marshall Mort, Ana Razmazma, Jordan Roberts, Ryan Slunaker, Ashley Walter and Shen Zhang are also working on the deal.
AppLovin, whose other co-founders include Andrew Karam and John Krystynak, focused on developing products, rather than marketing and sales, during its first two years in business. AppLovin signed up 300 customers in that period and two months after its official launch in July 2014 had a $100 million revenue “run rate” and high-profile users like Opentable Inc., Spotify AB and Uber Technologies Inc., according to Business Insider.
In its release announcing its sale, AppLovin said it specifically chose Orient Hontai for its strong connection to the Chinese market, which AppLovin hopes will help it expand globally.
Zhan Chen, a corporate partner with Wilson Sonsini Goodrich & Rosati after joining the firm’s Shanghai office in 2012 from Davis Polk & Wardwell, is representing Orient Hontai along with associates Jill Sheng and Shaokai Wang.
In other M&A news…
CBOE Holdings Inc./Bats Global Markets Inc.
The American Lawyer reported earlier this week on CBOE’s $3.2 billion buy of Bats, a digital exchange operator that has grown into the second-largest exchange in the U.S. The deal, announced on Sept. 26, is set to close in the first half of 2017. CBOE, owner of the Chicago Board Options Exchange, is financing the acquisition with $1.65 billion from Bank of America/Merrill Lynch.
Legal Advisers: Sidley Austin for CBOE; Fried, Frank, Harris, Shriver & Jacobson for BoA/Merrill Lynch as financial adviser to CBOE; Davis Polk for Bats
Rice Energy Inc./Vantage Energy LLC
In what The Wall Street Journal dubbed “the largest core dry gas Marcellus acquisition to date,” Canonsburg, Pennsylvania-based oil and gas producer Rice Energy has agreed to buy Englewood, Colorado-based shale producer Vantage in a $2.7 billion cash-and-debt deal. Rice will then sell Vantage’s assets for $600 million to Rice Midstream Partners LP, a limited partnership established by Rice to operate midstream assets in the Appalachian Basin. The dual deals, announced Sept. 26, are expected to close in the fourth quarter.
Legal Advisers: Latham & Watkins for Rice; Vinson & Elkins for Vantage; Akin Gump Strauss Hauer & Feld for Rice Midstream
Lanxess Corp./Chemtura Corp.
German chemicals maker Lanxess has agreed to buy Philadelphia-based competitor Chemtura in a $2.7 billion cash-and-debt deal, doubling the acquirer’s additives business and marking a shift towards specialty chemicals. For the deal, which is expected to close around mid-2017, Lanxess secured $2 billion in bridge financing from JPMorgan Chase & Co. and Barclays plc.
Legal Advisers: Skadden, Arps, Slate, Meagher & Flom for Lanxess; Freshfields Bruckhaus Deringer for JPMorgan; Davis Polk and Eversheds for Chemtura; Debevoise & Plimpton for Morgan Stanley as financial advisers to Chemtura
DTE Energy Co./M3 Midstream/Vega Energy Partners
On Sept. 26, DTE Energy agreed to acquire several midstream natural gas assets and gathering systems in the Marcellus and Utica shale regions from Houston-based M3 Midstream and Vega Energy for $1.3 billion, according to sibling publication Texas Lawyer. DTE will buy 100 percent of the Appalachia Gathering System in Pennsylvania and West Virginia, 40 percent of Stonewall Gas Gathering in West Virginia and a 15 percent stake in Stonewall from Vega. The deal is expected to close in the fourth quarter of this year.
Legal Advisers: Jones Day for DTE; Vinson for M3 Midstream; Norton Rose Fulbright for Vega
Phoenix Group Holdings Ltd./Abbey Life Insurance Co. Ltd./Deutsche Bank AG
Deutsche Bank announced on Sept. 28 its agreement to sell its British life insurance unit Abbey Life to New Jersey-based Phoenix Group. The $1.2 billion deal results in a pretax loss of $899 million for the lender, but allows Deutsche Bank to shore up its capital reserves amid worries over a potential $14 billion dispute with the U.S. Department of Justice over the German financial services giant’s treatment of mortgage-backed securities ahead of the 2008 financial crisis. The Abbey Life sale is subject to regulatory approval and expected to close by year’s end.
Legal Advisers: Clifford Chance for Deutsche Bank; Freshfields for Abbey Life Assurance Co.; Skadden, Arps, Slate, Meagher & Flom for Phoenix Group