Drew M. Altman and Jaret L. Davis, with Greenberg Traurig.
Drew M. Altman and Jaret L. Davis, with Greenberg Traurig. (J. Albert Diaz)

When United Technologies Corp. subsidiary Carrier sold $609 million in common stock held in its joint-venture partner Watsco Inc., it did so with a mechanism called a “wall crossing” for efficiency and to limit market disruption.

For Watsco’s counsel, Greenberg Traurig, that meant crunch time.

In a wall crossing, potential institutional investors are offered a chance to sign a confidentiality agreement preventing them from discussing or trading the targeted stock in exchange for inside information to decide whether to purchase in bulk before a public sale.

Wall crossings are generally used for transactions where a bank sees significant institutional interest and large blocks of stock can be placed early with a handful of large institutional investors, said Drew Altman, a Greenberg Traurig shareholder who led the team representing Watsco along with fellow shareholder and Miami co-managing partner Jaret L. Davis.

“They don’t want to be locked up in terms of the confidentiality and the inability to trade for a long period of time,” Davis said. “Once that wall cross gets initiated, there’s a bit of a time crunch to make sure this gets done. There was a bit of hustle on the part of all the teams involved, including ours, to make sure we keep that window as small as possible.”

Miami-based Watsco, one of the largest distributors of air-conditioning, heating and refrigeration equipment and related supplies in the U.S., gave the shares to air-conditioning manufacturer Carrier Corp. as payment in joint venture contracts in 2009 and 2012.

Through the joint ventures, the companies shared use of each other’s distribution centers, and the shares gave Carrier a vested interest in Watsco’s future.

Of three joint ventures that began as a 60/40 relationship with Watsco as the controlling party, two of the joint ventures are now 80 percent owned by Watsco. Watsco became Carrier’s largest customer, and the companies developed a strong bond. The price of Watsco stock has nearly tripled since it issued stock to Carrier in 2009.

“These joint ventures were designed to strengthen the relationship and strategically integrate these pieces of their business in order to generate better results benefitting both of them,” Altman said. “The joint ventures themselves have become quite successful. The joint ventures they have with Carrier represented 61 percent of Watsco’s revenue for 2016.”

UT, Carrier’s parent company, announced it planned to sell most of its shares in Watsco because of a change in accounting rules next year and because holding stock in other public companies is not part of its core business.

The secondary offering closed Feb. 28 at a price to the public of $144 per share, Altman said.

Carrier retained 95,000 shares of Class B stock in the company, which are the same in value as the stock but have more voting power.

As is customary in secondary offerings, the agreements required Watsco to participate in an underwritten offering of its shares. Even though the shares belonged to Carrier, all of the information that went into the offering document, prospectus and registration statement disclosure is about Watsco, Altman said.

When corporations opt to sell a significant amount of stock held in another company in a secondary offering, the counsel of the held company does the lion’s share of the legal work, Altman said.

The transaction entailed working with Wall Street banks Goldman Sachs and Robert W. Baird & Co., the joint book-running managers for the offering, as well as Carrier and UT, and coordinating Carrier’s timetable to dovetail with Watsco’s periodic reporting schedule.

Greenberg Traurig, which has represented Watsco for decades, has handled a number of its acquisitions, capital markets transactions and financings. In this round, Davis and Altman led a team that included shareholders Charles E. Stiver Jr. of Miami and Jack McBride of Los Angeles and associates Noam Lipshitz of Fort Lauderdale and Indira Sordo, Taylor J. Berman, Rachel Decker and Eliot Rimon of Miami.

“It was challenging inasmuch as we had to go start to finish over a short period,” Altman said. “A majority of the work in the transaction took place in the 10-12 days preceding the closing. … There were plenty of late hours and the standard push at the end to get everything done.”