Simpson Thacher, Cravath Handle Microsoft’s E-Book Investment

Microsoft will invest $300 million in Barnes & Noble’s Nook division, taking a 17.6 percent stake in the e-book business as the companies join forces to compete with market leader Amazon.

The deal, which brings together Barnes & Noble’s digital and college businesses in a new, yet-to-be-named subsidiary, values the Nook division at $1.7 billion. This is more than the unit’s parent company has been worth since mid-2008, according to The New York Times.

The partnership provides Barnes & Noble with a cash infusion and helps the world’s largest bookseller expand its customer base through a new Nook application that will integrate its digital bookstore with the forthcoming Windows 8 operating system. Microsoft, meanwhile, gains a footing in the e-book business, including the college textbook market that is seen as a large area for future e-book growth.

As part of the agreement, the two companies also have agreed to settle a patent dispute, and Barnes & Noble and the new subsidiary will have a royalty-bearing license under Microsoft’s patents for its Nook and tablet products.

Launched in 2009, Barnes & Noble’s Nook has been a competitor for Amazon’s bestselling Kindle, helping to cut Amazon’s share of the market from 90 percent to around 60 percent to 65 percent according to The Associated Press.

In January, Barnes & Noble announced it was exploring options for its digital business, resulting in the Microsoft investment. The companies said they are further considering completely separating the new subsidiary from Barnes & Noble in the future.

In addition to its digital business, Barnes & Noble, based in New York, operates 691 retail stores in 50 states as well as 641 college bookstores. Software giant Microsoft is based in Redmond, Wash.

Cravath, Swaine & Moore advised Barnes & Noble with a New York team that included partners Scott Barshay and Andrew Thompson, corporate; Stephen Gordon, tax; Paul Zumbro, banking; Eric Hilfers, executive compensation and benefits; and Sandra Goldstein and Roger Brooks, litigation; with practice area attorney Sarah Rosen, banking; and associates Matthew Merkle, Travis Wofford and Thomas McElroy, corporate; J. Leonard Teti II and Rachel Kiwi, tax; Sarah Dunn Davis, banking; and associate Jarrett Hoffman, executive compensation and benefits. Andrew Langworthy, who is not yet admitted, also worked on corporate matters.

Microsoft turned to a Simpson Thacher & Bartlett team that included New York partners Alan Klein and Casey Cogut, M&A; Gary Mandel, tax; and Lori Lesser, intellectual property; with associates Anthony Vernace and Shabarika Ajitkumar, M&A; and Jonathan Goldstein and Danny Salinas, tax.

Wachtell Advises $5.3 Billion Sale of Sunoco to Energy Transfer Partners

Pipeline operator Energy Transfer Partners will acquire oil transportation and distribution company Sunoco in a $5.3 billion deal.

Sunoco shareholders will receive $50.13 per Sunoco share in cash and Energy Transfer stock, a 23 percent premium over the company’s April 27 closing price.

The deal, expected to close by the end of the year, will help diversify ETP’s business, strengthening its presence in transportation, crude oil storage and logistics, and refined products. The company, based in Dallas, currently has pipeline operations in 11 states and owns the largest intrastate pipeline system in Texas.

Sunoco, headquartered in Philadelphia, also operates 4,900 gas stations in the United States. The company will continue with its plans to exit the oil refining business, announced last year, and discussions with The Carlyle Group about a joint venture for Sunoco’s South Philadelphia refinery will also proceed.

Wachtell, Lipton, Rosen & Katz represented Sunoco with a New York deal team led by corporate partners David Katz and David Lam, with partners Nelson Fitts, antitrust; Adam Shapiro, executive compensation and benefits; and Eiko Stange, tax; and associates James Gilmartin and Sebastian Fain, corporate; Yuni Yan, antitrust; Adam Kaminsky and Michael Schobel, executive compensation and benefits; and Michael Sabbah, tax.

Energy Transfer Partners was advised by a Latham & Watkins corporate team led by Houston partners William Finnegan, Sean Wheeler and Chicago partner Timothy FitzSimons, with New York partner Robert Zuccaro, financing; Houston partners Timothy Fenn, tax; Joel Mack, environmental; and Craig Kornreich and Catherine Ozdogan, financing; Washington, D.C., partners Kenneth Simon and Natasha Gianvecchio, regulatory; Michael Egge, antitrust; Patrick Shannon, financing; and David Della Rocca, employee benefits; and Los Angeles partner Laurence Stein, tax.

Bingham McCutchen acted as tax counsel for Energy Transfer Partners, with a legal team that included Washington, D.C., partners Bradford Whitehurst, William McKee, Gary Huffman, Jasper Howard and Michael Schultz. Morris Nichols Arsht & Tunnell partners Andrew Johnston, Delaware corporate law and Louis Hering, commercial law, also advised Energy Transfer Partners.