The hugest deal of last week will take your breath away.
On Jan. 17, Reynolds American Inc. announced that it had accepted an offer from British American Tobacco plc to acquire the remaining 57.8 percent stake in the company it didn’t already own in a Joe Camel-cool $49.4 billion deal.
The proposed megamerger, which was first unveiled late last year, will unite the makers of cigarette brands like Camel, Lucky Strike, Newport and Pall Mall.
BAT, which already owned 42 percent of Winston-Salem, North Carolina-based Reynolds American, will become the world’s largest publicly traded tobacco company if its purchase of the target closes as expected in the third quarter of this year.
The deal marks return of London-based BAT to the lucrative, but heavily regulated, U.S. tobacco market after a 12-year absence. (In 2004, BAT’s former U.S. unit Brown & Williamson merged with Reynolds American predecessor R.J. Reynolds in a $3 billion deal.)
Cravath, Swaine & Moore and Herbert Smith Freehills have been advising BAT since it first attempted to acquire full control of Reynolds American last year, as noted by sibling publication Legal Week. BAT general counsel Jerome Abelman and retired Cravath partner Ronald Rolfe serve as members of Reynolds American’s board of directors.
The Cravath team advising BAT is led by New York-based corporate partners Philip Gelston, David Perkins, Ting Chen and John White and corporate partner Alyssa Caples in London. Herbert Smith Freehills is fielding a London-based team led by the firm’s chairman and senior partner James Palmer, financial institutions head Alex Kay, tax head Isaac Zailer and corporate partner Gillian Fairfield.
Jones Day, a firm with close ties to the new U.S. administration and a lead adviser to Reynolds American in 2014 on its $27.4 billion acquisition of tobacco industry rival Lorillard Inc., is once again advising the company on the takeover bid by BAT. M&A partner Randi Lesnick in New York and corporate partners Vica Irani and Leon Ferara in London are leading a team of lawyes from the firm working on the matter. Martin Holton and McDara Folan III serve as general counsel and deputy general counsel of Reynolds American, respectively.
Weil, Gotshal & Manges corporate head Michael Aiello in New York and London managing partner Mike Francies are counseling a transactional committee of Reynolds American’s board of directors, along with senior consultant Ian Hamilton. Other Weil lawyers working on the deal include corporate partner Matthew Gilroy, securities litigation partner Greg Danilow, banking partner Morgan Bale and capital markets partner Frank Adams, all of whom are in New York, as well as public company advisory partner Ade Heyliger and antitrust partner Steven Newborn in Washington, D.C.
Moore & Van Allen, one of the largest firms in North Carolina, is also advising the special committee of Reynolds American’s board of directors tasked with negotiating the deal with BAT. Kirkland & Ellis corporate partners Sarkis Jebejian—who joined the firm four years ago from Cravath—and David Feirstein are representing Lazard Ltd. as financial adviser to Reynolds American. Simpson Thacher & Bartlett corporate partners Robert Spatt and Sebastian Tiller are counseling J.P. Morgan Securities LLC in its role as financial adviser to Reynolds American.
Skadden, Arps, Slate, Meagher & Flom also has a role advising The Goldman Sachs Group Inc. as financial adviser to a transaction committee of Reynolds American’s board of directors. Skadden M&A partners Jeremy London and Paul Schnell, corporate finance counsel Ryan Dzierniejko and associate Jacques Anderson are working on the matter.
In other M&A news…
Boeing Co. / SpiceJet Ltd.
Fresh off forging a $16.6 billion plane purchase with Iran in December, Chicago-based commercial aviation giant Boeing announced on Jan. 13 an $11 billion deal to supply Indian budget airline SpiceJet with 100 of its 737 planes. The new aircraft will be delivered between 2018 and 2024. The sale boosts Boeing’s expansion into India, one of the world’s fastest and largest growing aviation markets.
Legal Advisers: Arnold & Porter Kaye Scholer and Link Legal India Law Services for SpiceJet; an in-house legal team for Boeing
Exxon Mobil Inc. / Bass Family
Exxon Mobil, an energy giant whose former CEO is poised to become the nation’s top diplomat, announced on Jan. 17 its acquisition of 275,000 acres in the Permian Basin oil field that straddles New Mexico and West Texas. The deal includes $5.6 billion in stock and $1 billion in contingent cash payouts from the billionaire Bass family of Fort Worth, Texas. The sale will more than double Exxon’s assets in the Permian, the largest oil field in the U.S.
Legal Advisers: Davis Polk & Wardwell for Exxon Mobil
Takeda Pharmaceutical Co. Ltd. / Ariad Pharmaceuticals Inc.
On Jan. 20, Japanese pharmaceutical giant Takeda agreed to buy Cambridge, Massachusetts-based cancer drug maker Ariad in a $5.2 billion deal. The transaction, expected to close by the end of February, gives Takeda access to Ariad’s cancer drugs like Iclusig, a leukemia drug that reportedly generated an estimated $170 million to $180 million in sales for 2016.
Legal Advisers: Cleary Gottlieb Steen & Hamilton for Takeda; Paul, Weiss, Rifkind, Wharton & Garrison for Ariad
Noble Energy Inc. / Clayton Williams Energy Inc.
The Permian, increasingly a hot bed of M&A activity, saw Houston-based Noble nab about 120,000 oil-rich acres in West Texas through its acquisition of Midland, Texas-based Clayton Williams in a $2.7 billion cash-and-stock deal, according to sibling publication Texas Lawyer. The agreement, announced on Jan. 16 and expected to close during the second quarter of 2017, will see Noble assume $500 million of Clayton Williams debt, putting the total value of the transaction at around $3.2 billion.
Legal Advisers: Skadden for Noble; Latham & Watkins for Clayton Williams; Cleary Gottlieb for Goldman Sachs as financial adviser for Clayton Williams
Starwood Capital Group LLC / Milestone Apartments Real Estate Investment Trust
A unit of Greenwich, Connecticut-based private investment firm Starwood Capital announced on Jan. 19 that it would buy Milestone Apartments in deal valued at $2.85 billion. Toronto-based Milestone, structured as a REIT, owns and operates multifamily properties. The deal will boost Starwood Capital’s multifamily holdings, particularly throughout the southern U.S. where most of Milestone’s properties are primarily located.
Legal Advisers: Kirkland and Stikeman Elliott for Starwood Capital; Vinson & Elkins and Goodmans for Milestone
UnitedHealth Group Inc. / Surgical Care Affiliates Inc.
Minnetonka, Minnesota-based health insurance giant UnitedHealth unveiled on Jan. 9 its $2.3 billion acquisition of Deerfield, Illinois-based Surgical Care, an operator of more than 200 health care facilities. The target will merge with UnitedHealth’s OptumCare unit, which provides urgent and primary care, to expand the latter’s outpatient surgical offerings. The transaction is expected to close in the first half of 2017.
Legal Advisers: Hogan Lovells for UnitedHealth; Cleary Gottlieb for Surgical Care; Debevoise & Plimpton for JPMorgan Chase & Co. as financial adviser to Surgical Care
Canada Pension Plan Investment Board / GlobalLogic Inc.
The Canadian Pension Plan Investment Board announced on Jan. 11 that it would buy a 48 percent stake in GlobalLogic, an IT consultancy firm with operations in India, from London-based buyout firm Apax Partners LP. Apax will retain a 48 percent stake in San Jose, California-based GlobalLogic. Financial terms of the deal were not disclosed, but sources knowledgeable of the transaction reportedly put its value at around $1.5 billion, according to Indian media reports.
Legal Advisers: Latham for the CPPIB; Kirkland for Apax Partners
BP plc / Woolworths Ltd.
On Dec. 27, British energy giant BP agreed to purchase a chain of gas stations across Australia owned by suburban Sydney-based Woolworths for $1.3 billion. The Australian Competition and Consumer Commission recently announced that it would review the acquisition, which will make London-based BP one of the largest fuel providers Down Under.
Legal Advisers: Corrs Chambers Westgarth for BP; Clayton Utz for Woolworths
Ipsen / SA Merrimack Pharmaceuticals Inc.
Cambridge, Massachusetts-based Merrimack agreed on Jan. 8 to sell its pancreatic cancer drug Onivyde and other assets to French drug maker Ipsen SA in a $575 million deal. Under the terms of the transaction, Paris-based Ipsen could pay an additional $450 million if Onivyde is approved to treat other cancers, bringing the total potential deal value to $1 billion.
Legal Advisers: Dechert for Ipsen; Skadden for Merrimack