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After weeks of speculation, two leading daily fantasy sports (DFS) providers confirmed Friday their plans to combine operations, setting aside a bitter rivalry in the face of mounting legal and lobbying costs brought about by calls for increased oversight of their industry.
Terms of the agreement between DraftKings Inc. and FanDuel Inc. were not disclosed, but sources told ESPN that the deal is structured as a merger of equals between the two DFS powerhouses. The transaction, which presents an early antitrust test for the Trump administration, is expected to close in the second half of 2017.
The two companies will continue to operate under their own names until a union is finalized. The merged company will be headquartered in Boston and New York, with DraftKings CEO Jason Robins—a cousin of Sullivan & Worcester IP partner Lawrence Robins in Boston—slated to head the combined company, while FanDuel CEO Nigel Eccles becomes chairman of the board.
FanDuel, founded in 2009 in Edinburgh, Scotland, has tapped Wilson Sonsini Goodrich & Rosati to advise on its merger with DraftKings. Wilson Sonsini previously advised private equity giant KKR & Co. LP on an investment in FanDuel. DraftKings arrived on the DFS scene in 2012 and created what could be characterized, at times, as a hostile rivalry with FanDuel.
At their peak, both companies were each valued at more than $1 billion, but their fortunes dimmed in late 2015 after a $750 million splurge on advertising to coincide with the start of U.S. football season. That drew the attention not only of the media, but state regulators, such as New York Attorney General Eric Schneiderman. In mid-October, FanDuel and DraftKings agreed to pay a collective $12 million to settle false advertising suits filed by Schneiderman’s office against both cash-strapped companies, which sought to pay the fine in installments.
The American Lawyer reported last month on Morgan, Lewis & Bockius’ lobbying fees for DraftKings, while Steptoe & Johnson has handled advocacy work for FanDuel. Both companies have also retained a bevy of litigators—from firms like Boies, Schiller & Flexner; Gibson, Dunn & Crutcher; Morrison & Foerster; Orrick, Herrington & Sutcliffe and Wilmer Cutler Pickering Hale and Dorr—to cope with the various probes and persuade state legislators to remove restrictions on DFS play. ESPN reported in late October that the legal and lobbying costs have contributed at least in part to layoffs at both companies and put pressure on them to consider a combination.
Cooley, which counseled DraftKings in 2014 and 2015 on exclusive sponsorship deals with Major League Baseball and NASCAR, is now advising the company on its proposed merger with FanDuel. Cooley corporate partner Alfred Browne III and M&A co-chair Barbara Borden are leading a cross-border team that includes London managing partner Justin Stock, who led a 55-lawyer group that joined Cooley in January 2015 from Edwards Wildman Palmer.
Other Cooley lawyers working on the deal for DraftKings are tax partners Natasha Kaye and Jeremy Naylor, technology and communications partner Adam Chase, executive compensation partner Paula Holland and special counsel Joshua Friedman, finance partner Aaron Pomeroy, privacy and data protection special counsel Randy Sabett, technology transactions special counsel Charles Haley and media transactions special counsel Kristin Leavy.
Cooley associates Aaron Archer, Jackie Bell, Danny Bloom, Derek Colla, Lindsey Crump, Reshma David, Stephanie Gentile, Kevin Gibson, Murtaza “Taz” Hassonjee, Layne Jacobs, Anniki Laine, Adaku Nwachukwu, Alya Randell-Khan, Rebecca Ross, Matthew Silverman, Nicole van de Leuv, Paris Waterman and Mark Woodroffe round out the transactional team for DraftKings. Ropes & Gray is serving as antitrust counsel to the company through partners Michael McFalls, Chong Park and Jonathan Klarfeld, as well as associates Amy Paul and Frank Qi. (Park joined Ropes & Gray’s office in Washington, D.C., last year from Steptoe & Johnson.)
FanDuel stakeholder Comcast Corp. is being advised by Davis Polk & Wardwell corporate partner Brian Wolfe, tax co-head Neil Barr and associates Kay Ng and Evan Rosen. The firm has served as longtime outside counsel to the Philadelphia-based cable giant. London-based Piton Capital, another stakeholder in FanDuel, has turned to Orrick to advise on the company’s merger with DraftKings.
Christian Genetski, a former vice chair of the Internet practice at Sonnenschein Nath & Rosenthal who left the Dentons predecessor in 2010 to form Washington, D.C.-based Zwillinger Genetski (now called ZwillGen), currently serves as FanDuel’s chief legal officer. Marc Zwillinger, his former colleague, has long handled IP, litigation and regulatory work for FanDuel. ZwillGen assisted FanDuel on regulatory issues related to the DraftKings deal.
Seth Harris, a former acting secretary of the U.S. Department of Labor and current counsel at Dentons in Washington, D.C., was hired last year by the Fantasy Sports Trade Association to head an independent self-regulatory body for the DFS sector. Dentons has received $50,000 from the FSTA through the third quarter of this year to lobby on “issues that may affect the fantasy sports industry,” according to records on file with the U.S. Senate.
Samsung Electronics Co. Ltd. / Harman International Industries Inc.
On Nov. 15, Samsung announced it had agreed to acquire Stamford, Connecticut-based automotive technology company Harman International in an $8 billion deal. The transaction, as noted by sibling publication The Asian Lawyer, is the largest-ever overseas acquisition by the South Korean electronics giant. Harman develops onboard audio equipment for cars that connects to Internet and mobile devices. The deal, scheduled to close in mid-2017, sees Samsung expand into the auto industry following the calamitous rollout of its Galaxy Note 7 phone.
Legal Advisers: Paul Hastings for Samsung; Wachtell, Lipton, Rosen & Katz for Harman International
Regency Centers Corp. / Equity One Inc.
Jacksonville, Florida-based shopping center investor and developer Regency Centers announced on Nov. 14 its proposed purchase of fellow shopping center owner Equity One in an all-stock $4.6 billion deal that creates a real estate investment trust worth some $15.6 billion, according to sibling publication GlobeSt. The transaction is expected to close in the first quarter of 2017.
Legal Advisers: Wachtell for Regency Centers; Simpson Thacher & Bartlett for JPMorgan Chase & Co. as financial adviser to Regency; Kirkland & Ellis for Equity One; Shearman & Sterling for Barclays plc as financial adviser to Equity One
Siemens AG / Mentor Graphics Corp.
Siemens agreed on Nov. 14 to buy Wilsonville, Oregon-based Mentor Graphics in $4.5 billion deal marking the German engineering giant’s latest attempt to widen its U.S. presence and build up its software capabilities. The deal is expected to close by the second quarter of 2017.
Legal Advisers: Latham & Watkins and Freshfields Bruckhaus Deringer for Siemens; O’Melveny & Myers for Mentor Graphics
Tesoro Corp. / Western Refining Inc.
San Antonio-based Tesoro announced on Nov. 17 plans to purchase refineries in Minnesota, New Mexico and Texas by absorbing El Paso-based Western Refining in a $4.1 billion deal. The merger, expected to close in the first half of 2017, creates a combined company that will become the fourth-largest independent U.S. refiner with a fuel processing capacity of over 1.1 million barrels a day.
Legal Advisers: Sullivan & Cromwell for Tesoro; Cleary Gottlieb Steen & Hamilton for The Goldman Sachs Group Inc. as financial adviser to Tesoro; Davis Polk for Western Refining; Shearman & Sterling for Barclays as financial adviser to Western Refining
Koch Equity Development LLC / Infor
Koch Equity, the investment arm of industrial conglomerate Koch Industries Inc., announced on Nov. 16 its $2 billion buy of cloud-based business management software provider Infor, according to sibling publication the Daily Report. The deal is the largest in Koch Equity’s history as it pushes into the technology sector. The sale of Infor, owned by private equity firms Golden Gate Capital LP and Summit Partners LP, is expected to close in early 2017.
Legal Advisers: Jones Day for Koch Equity; Gibson Dunn for Infor; Kirkland for Golden Gate Capital and Summit Partners
The Blackstone Group LP / LBA Realty LLC
In a big bet on logistics, New York-based buyout giant Blackstone agreed in September to pay $1.5 billion to acquire 46 industrial properties—mostly warehouses located in the western U.S.—from Irvine, California-based LBA Realty. Earlier this month, Blackstone affiliate completed its $1.162 billion purchase of a portfolio of seven West Coast office assets from the Houston-based Hines Real Estate Investment Trust Inc. That deal, as noted by sibling publication Texas Lawyer, was first announced in July and completed on Nov. 7.
Legal Advisers: Simpson Thacher for Blackstone on the Hines REIT deal; Baker Botts for Hines REIT; Seyfarth Shaw for LBA Realty
The Estee Lauder Companies Inc. / Too Faced Cosmetics U.K. Ltd.
New York-based beauty care giant Estee Lauder also announced on Nov. 15 the largest deal in its history—a $1.45 billion buy of millennial makeup brand Too Faced from Greenwich, Connecticut-based buyout firm General Atlantic LLC. The acquisition, slated to close in December, is Estee Lauder’s latest effort to appeal to a younger demographic. Last month the company bought Becca Cosmetics from Luxury Brand Partners LLC for an undisclosed sum, which some reports put at roughly $200 million.
Legal Advisers: Lowenstein Sandler for Estee Lauder; Skadden Arps, Slate, Meagher & Flom for Too Faced founders Jerrod Blandino and Jeremy Johnson; Paul, Weiss, Rifkind, Wharton & Garrison for General Atlantic; Greenberg Traurig for Becca Cosmetics
Terumo Corp. / Abbott Laboratories
Suburban Chicago-based health care products manufacturer Abbott Labs confirmed last week its plan to sell some cardiovascular devices to Japanese medical equipment maker Terumo in a $1.12 billion deal. The transaction comes as Abbott Labs moves forward with its $25 billion acquisition earlier this year of Minnesota-based medical device company St. Jude Medical Inc. Abbott Labs has been shedding nonessential assets in an effort to close on that mega-merger by year’s end. In September, Abbott Labs unloaded its eye health care unit in a $4.33 billion deal.
Legal Advisers: Wachtell for Abbott Labs
Bupa Insurance Ltd. / Oasis Dental Care
Bupa, a London-based health care giant initially known as British United Provident Association, said on Nov. 18 that it had agreed to pay a little more than $1 billion to acquire the Oasis Dental Care clinic chain from London-based buyout firm Bridgepoint Capital.
Legal Advisers: White & Case for Bupa; Travers Smith for Oasis Dental Care
Castleton Commodities International LLC / Anadarko Petroleum Corp.
Stamford-based Castleton Commodities announced on Nov. 18 its purchase of oil and gas assets in East Texas from energy giant Anadarko for more than $1 billion. The deal is the latest move by the commodities trader to expand its presence in the shale gas plays of East Texas. Castleton Commodities will own more than 160,000 net acres in the region as a result of the deal.
Legal Advisers: Vinson & Elkins and Bracewell for Castleton Commodities