Six Firms Advise on $20 Billion Deals Reshaping Novartis, GlaxoSmithKline

Freshfields Bruckhaus Deringer and Hogan Lovells are helping Swiss pharmaceutical giant Novartis undergo a massive restructuring involving a series of transactions worth more than $20 billion. The move will see the company boost its oncology portfolio while shedding some of its underperforming assets.

The transactions include a joint venture with fellow pharmaceutical giant GlaxoSmithKline. Novartis has agreed to pay up to $16 billion for an oncology business from GSK, which will then buy most of Novartis’ vaccines portfolio for as much as $7.1 billion, while the two companies will also combine their consumer health care businesses. Novartis is also selling its animal health business to Eli Lilly and Company for roughly $5.4 billion.

Novartis is paying $14.5 billion to GSK for the oncology division, along with up to $1.5 billion in future payments that are dependent on the unit’s products hitting certain development milestones. London-based GSK will then pay $5.25 billion up front for Novartis’ vaccines portfolio, excluding its flu vaccines, along with up to $1.8 billion in future payment and potential royalties. Meanwhile, Novartis will own a 36.5 percent stake in the two companies’ consumer health care joint venture, with GSK holding the remaining shares.

The deals are expected to close during the first half of next year, pending antitrust approval.

Novartis has also agreed to shed its animal health business, which generated roughly $1.1 billion in revenue last year. Eli Lilly will acquire that unit in an all-cash deal and combine it with its own animal health business, Elanco. That deal is expected to be completed by the end of the first quarter of 2015, pending regulatory approval.

Novartis has turned to Freshfields Bruckhaus Deringer for advice on all of Tuesday’s announced transactions. Corporate partner Julian Long, who heads Freshfields’ London office, is leading the firm’s team on the deals with GSK, along with London antitrust head Rod Carlton, Brussels competition partner Thomas Janssens and Washington, D.C., antitrust partner Paul Yde. On the Eli Lilly deal, Freshfields is fielding a team that includes New York corporate partners Doug Bacon and Julian Pritchard. Joining them are Paul Yde and tax partner Claude Stansbury in Washington, D.C.

Hogan Lovells is also advising Novartis. New York–based corporate partner Adam Golden is leading a team spread throughout Northern Virginia, Washington, D.C., Denver and Baltimore. The team includes corporate partner Adam Bellack and IP partner Cullen Taylor, as well as IP counsel Anishiya Abrol. Associates are Adam Aft, Allison Donovan, Carrie Etherton, Venroy July, Thomas Kennedy, Catlan McCurdy and Adriana Tibbitts.

Slaughter and May is advising GSK on its complicated, three-part agreement with Novartis. Corporate partner Simon Nicholls is heading the firm’s team. Corporate partners Gavin Brown, Richard Smith and David Johnson are advising along with competition partner Bertrand Louveaux, IP partner Susie Middlemiss, employment partner Sandeep Maudgil, real estate partner David Waterfield and financing partner Guy O’Keefe. All are in based in London.

Cleary Gottlieb Steen & Hamilton is serving as antitrust counsel to GSK with a team led in the U.S. by Washington, D.C.–based partner George Cary and counsel Kathleen Bradish. Cologne-based partners Romina Polley and Patrick Bock are leading the European team along with counsel Silke Heinz.

Swiss firm Niederer Kraft & Frey is also advising GSK.

Eli Lilly is being represented by a Weil, Gotshal & Manges team led by corporate partners Raymond Gietz and Matthew Gilroy. IP partners Charan Sandhu and Elizabeth Weiswasser are also advising, along with tax partner Helyn Goldstein, benefits partner Amy Rubin and real estate partner Samuel Zylberberg. Weil associates are Adrienne Baker, Daniel Birnhak, Claire Comfort, Mark Dundon, Melissa Meyrowitz, Joshua Nemser, Megan Pendleton and Rachel Vigneaux. All are in New York but Dundon, who is in Dallas.

Fried Frank Counsels Michael Foods in $2.45 Billion Sale to Post Holdings

Post Holdings, maker of cereal and other dry goods, confirmed last week that it has agreed to buy Michael Foods from its private equity owners for $2.45 billion in Post’s largest acquisition to date. Michael Foods, which is based in Minnetonka, Minn., is a food distributor and processor that specializes in cheese, egg and refrigerated potato products. The target’s brands include All Whites egg whites and Better’n Eggs egg substitutes as well as Simply Potatoes and Crystal Farms cheeses.

In its announcement, Post said the acquisition will allow the company to take advantage of consumer trends toward protein-rich breakfasts. Post—which is best known for making such cereal brands as Fruity Pebbles, Grape-Nuts, Honey Bunches of Oats and Raisin Bran—was spun off from its former parent, Ralcorp Holdings, in a $900 million deal that wrapped up in 2012. (Ralcorp was then subsequently bought by ConAgra Foods in a $5 billion deal later that year.)

Post, which is based in St. Louis, is acquiring Michael Foods from private equity firm Thomas H. Lee Partners and GS Capital Partners, the private equity arm of Goldman Sachs. The former acquired Michael Foods in 2003 and sold an 80 percent stake in the company to GS Capital in 2010 for $1.7 billion.

St. Louis firm Lewis, Rice & Fingersh is representing Post. M&A partners Tom Zook and John Bodnar are leading the firm’s team along with associate Alfred Ludwig. Tax partner Michael Donovan, securities partner Leonard Essig, real estate partner Marisa Byram and finance partners Steven Drapekin and Mark Winings are also advising.

Diedre Gray is Post’s general counsel.

Meanwhile, Michael Foods is being represented by Fried, Frank, Harris, Shriver & Jacobson. Corporate partner Abigail Bomba and corporate department cochair Robert Schwenkel are leading a team that includes corporate partners Stuart Gelfond and F. William Reindel, compensation and benefits partner Donald Carleen, antitrust partner Peter Guryan, litigation partner David Hennes and tax partner David Shapiro. All are in New York.

Michael Foods’ general counsel is Carolyn Wolski.