Bloomberg News

Morgan on Leucadia, Wachtell, O’Melveny: Business of Law

November 13, 2012

Leucadia National Corp. (LUK:US) agreed to buy the portion of Jefferies Group Inc. (JEF:US) it doesn’t already own for about $2.76 billion.

Morgan, Lewis & Bockius LLP acted as legal advisers to Jefferies, and Wachtell, Lipton, Rosen & Katz acted as legal advisers to the Transaction Committee. Weil Gotshal & Manges LLP acted as legal advisers to Leucadia, and Proskauer Rose LLP acted as legal advisers to the Leucadia Board of Directors.

Morgan Lewis’s team was led by R. Alec Dawson, Sheryl Orr and Robert Robison and included Stephen Farrell, Kenneth Kail, tax and Richard Petretti, finance.

Weil advised Leucadia and the team was led by mergers and acquisitions partners Andrea Bernstein and Matthew Gilroy and also included tax partners Mark Hoenig and Chayim Neubort.

The Proskauer partners advising the Board of Directors of Leucadia National Corp. on the deal are Martin Bienenstock and Lorenzo Borgogni.

Wachtell Lipton’s team is led by corporate partners Edward D. Herlihy and David E. Shapiro. It also includes partners: Jeannemarie O’Brien, executive compensation and benefits; and Jodi S. Schwartz and Joshua M. Holmes, tax.

Cleary Gottlieb Steen & Hamilton LLP is advising Citigroup Global Markets, financial adviser to the Transaction Committee of Jefferies Group Inc. The Cleary Gottlieb corporate team includes partner Victor Lewkow.

Investors will receive 0.81 Leucadia share for each Jefferies share they own, the companies said yesterday in a statement, valuing the entire company at $3.59 billion, based on data from the company’s most recent 10-Q regulatory filing. Jefferies management will run the firm, according to the report.

Leucadia, which already holds about 28.6 percent of New York-based Jefferies, boosted its stake in November as Jefferies’s stock slid on investor concern it may be burned by Europe’s sovereign-crisis. The combined firm, to be led by Jefferies Chief Executive Officer Richard Handler, will make the investment bank’s balance sheet more resilient, helping it weather and take advantage of market turmoil, the firms said.

“For Jefferies, the deal may allow them to grow and invest without market pressures in the short term,” said Christopher Wheeler, an analyst at Mediobanca SpA in London.

The deal values Jefferies about 24 percent higher than its closing price on the New York Stock Exchange on Nov. 9. Jefferies has climbed 3.8 percent this year, after dropping 48 percent in 2011. Leucadia has declined 4.1 percent this year.

Handler also will remain CEO of Jefferies as the transaction with New York-based Leucadia is completed in the first quarter, the companies said.

For more, click here.

Sherwin-Williams to Buy Paint Maker Comex for $2.34 Billion

Jones Day is advising Sherwin-Williams Co. (SHW:US), the largest U.S. paint retailer, in its agreement to acquire closely held Consorcio Comex SA de CV for about $2.34 billion including debt to gain Mexico’s largest paint maker.

The Jones Day deal team is led by Cleveland mergers and acquisitions partner James Dougherty. The team also includes partners Javier Martinez del Campo, mergers and acquisitions; and Jose Estandia, mergers and acquisitions/energy.

Sherwin-Williams will fund the all-cash deal by selling $2 billion in 5-, 10- and 30-year bonds, the Cleveland-based company said in a presentation yesterday on its website. It didn’t specify how much debt it’s assuming. The acquisition would be the biggest takeover in Mexico by a U.S. company since 2004, according to data compiled by Bloomberg.

Sherwin-Williams Chairman and Chief Executive Officer Christopher M. Connor is adding to the company’s 3,500 North American stores after an improving North American housing market led to record earnings (SHW:US) in the third quarter. Comex, which has exclusive sales to 3,300 paint stores in Mexico, generated two- thirds of its $1.4 billion of revenue last year in Latin America, Sherwin-Williams said in the presentation.

“While the financial details remain unclear, we view the deal as strategically accretive to the Sherwin-Williams franchise as it extends the company’s already impressive distribution network to Mexico and Latin America,” Ghansham Panjabi, a New York-based analyst at Robert W. Baird & Co. who rates the shares neutral, or the equivalent of hold, said in a report yesterday.

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Precision Castparts to Acquire Simmons’s Timet for $2.9 Billion

Precision Castparts Corp. (PCP:US), the maker of metal forgings for jet engines, agreed to buy Texas billionaire Harold Simmons’s Titanium Metals Corp. (TIE:US) for $2.9 billion in its largest acquisition in almost two decades.

Weil, Gotshal & Manges LLP provided outside legal counsel to Titanium Metals and Glenn West led the team. Additional partners on the deal included Greg Danilow, litigation; Jay Tabor, corporate; Jared Rusman, tax; Michael Kam, benefits; Douglas Nave, antitrust; P.J. Himelfarb, public company advisory group.

O’Melveny & Meyers LLP and Stoel Rives LLP advised Precision.

Titanium Metals stockholders will get $16.50 a share, 44 percent more than the Dallas-based company’s closing price on Nov. 8, according to a statement. Entities controlled by Simmons have agreed to sell their 45 percent stake in the company, known as Timet, Precision Castparts said.

The deal, Precision’s largest since at least 1995, extends an acquisition spree under Chief Executive Officer Mark Donegan, who has overseen more than two dozen purchases in the past decade, data compiled by Bloomberg show. Planemakers Boeing Co. (BA:US) and Airbus SAS have urged suppliers to consolidate to help support record increases in jet output.

Donegan said in a July interview that he foresaw at least $1 billion in merger opportunities in the next 16 months. Portland, Oregon-based Precision agreed last month to acquire pipe processor Texas Honing Inc., and said in July it was buying four factories from Canadian landing-gear maker Heroux-Devtek Inc. (HRX) to expand in the aviation-parts industry.

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Firm News

Ashurst Opens Middle East Office in Jeddah, Saudi Arabia

Ashurst LLP is starting a Jeddah, Saudi Arabia, office by establishing an association with Saudi partner Faisal Adnan Baassiri, the head of legal at SEDCO, a Saudi, Shari’ah- compliant wealth-management company.

The firm will focus on energy, transport and infrastructure matters and offer corporate services in the region, especially in Jeddah.

Baassiri, who joins Ashurt as a partner, is a general practice lawyer, with expertise in general corporate work, real estate and funds, the firm said.

“The economy in Saudi Arabia is undergoing significant expansion, which is set to continue over the next few years. There are substantial business opportunities that fit well with our regional strategic focus on the energy, transport and infrastructure industries,” Joss Dare, head of Ashurst in the Middle East, said in a statement. “This is the first step for us in the Kingdom and we are confident that our offering will grow in breadth and depth.”

Ashurst has over 1,700 lawyers in 24 offices in 14 countries around the world.

O’Melveny & Myers Opens Office in Seoul

O’Melveny & Myers LLP opened an office in Seoul yesterday, the firm’s 16th office worldwide.

Korea practitioners Jinwon Park and Sungyong Kang will be residents of the Seoul office. Los Angeles-based partner Joseph Kim, head of the firm’s Korea practice, will work with Kang and Park as well as other O’Melveny attorneys who work on Korea- related matters.

O’Melveny has advised Korean clients on antitrust and patent litigation, among other matters. The firm represented Asiana Airlines, which had an antitrust claim dismissal affirmed by the U.S. Court of Appeals for the Second Circuit. O’Melveny led the briefing and argued on behalf of about two dozen airlines, including Asiana, that were accused of conspiring to fix air cargo rates, the firm said.

Seoul will be O’Melveny’s seventh Asia office, along with locations in Shanghai, Hong Kong, Beijing, Singapore, Tokyo, and Jakarta (in an association with Indonesian law firm Tumbuan & Partners). The firm has about 130 legal professionals resident in its Asia offices. O’Melveny has 800 lawyers in 16 offices worldwide.

Moves

Cozen O’Connor Hires Former Pennsylvania Attorney General

Cozen O’Connor hired Jerry Pappert, who was the executive vice president, general counsel and secretary of biopharmaceutical company Cephalon Inc., as a commercial litigation partner in Philadelphia.

He is the former Pennsylvania Attorney General and current chairman of the Pennsylvania Banking and Securities Commission. He will work with Cozen O’Connor Public Strategies, the firm’s ancillary government relations firm.

Pappert will assist clients with government investigations, white collar criminal matters, corporate compliance, government relations and strategy, and general commercial litigation.

At Cephalon, he was responsible for directing company legal matters, including the sale of the company to Teva Pharmaceutical Industries Ltd. Pappert was Attorney General of Pennsylvania from 2003 to 2005. From 1997 to 2003, he was Pennsylvania’s First Deputy Attorney General. He started his career as a summer associate at Cozen O’Connor.

Cozen O’Connor has 575 attorneys at 21 offices in the U.S., Toronto and London.

Squire Sanders Hires IP and Technology Litigation Head

Squire Sanders LLP hired Steven M. Auvil as a partner and head of the intellectual property and technology group’s litigation practice in the U.S. He joins from Benesch, Friedlander, Coplan & Aronoff LLP, where he was chairman of its intellectual property practice group, the firm said. He will split his time between the Cleveland and Washington offices.

“Steve is held in high regard by his clients and by the IP litigation bar, he has a consistent history of winning tough cases, and he has an enviable track record as a practice group leader,” David S. Elkins, global chairman of Squire Sanders’ intellectual property and technology practice group said in a statement.

Auvil has been first chair in patent, trade secret, copyright and trademark/trade dress cases in district courts as well as disputes before U.S. administrative agencies. He has also argued patent-related appeals before the U.S. Court of Appeals for the Federal Circuit. He is also a patent lawyer admitted to practice before the U.S. Patent & Trademark Office, and has experience counseling clients on IP portfolio developments; patent preparation and prosecuting; freedom to operate, infringement and invalidity opinions; and IP-related deals, the firm said.

Squire Sanders has more than 1,300 lawyers in 37 offices in 18 countries.

Litigation

Mariner Health Sues Law Firm Troutman Sanders Over Sale Payment

Mariner Health Care Inc., the nursing-home operator, sued its former law firm for allegedly allowing $40 million from an asset sale to go to another client and trying to paper over the payment after the fact.

The money, from the $50 million sale of a medical-supply unit to Omnicare Inc. (OCR:US), wound up going to Rubin Schron, an investor who bought some of Mariner’s real estate through a company he controlled, according to a complaint filed Nov. 9 against the law firm, Troutman Sanders LLP, in Georgia state court in Atlanta. Mariner and Schron’s company were both represented by lawyers who eventually joined Troutman Sanders, according to the complaint.

Mariner received $10 million directly for the medical- supply sale, while the rest was to be paid through an intermediary. The lawyers didn’t complete documents recording payment for the Omnicare deal until after they got a subpoena from the U.S. Justice Department, which was investigating the transaction for possible violation of kickback laws, Mariner alleged.

“If Troutman could account for the missing $40 million payment on ‘paper,’ then Schron could avoid the risk of being found guilty of violating the Anti-Kickback Statute,” according to the complaint. Atlanta-based Mariner is seeking $40 million and punitive damages.

This isn’t the only lawsuit involving Schron and Troutman Sanders. He sued in New York state court 2010, accusing the law firm of breaching fiduciary duties. That case is pending. Schron isn’t a defendant in the Mariner lawsuit.

Troutman Sanders yesterday issued a statement calling Mariner’s claims “without merit” and saying the firm will fight the Georgia lawsuit. Steve A. Engel, an attorney for Schron, called the Georgia lawsuit “baseless.”

The law firm of Jenkens & Gilchrist represented Schron in the 2004 purchase of the Mariner real estate, according to the Georgia complaint. A few months later, most of the firm’s New York office left to join Troutman Sanders, according to the complaint. Atlanta-based Troutman Sanders was Mariner’s “outside general counsel” from April 2005 to April 2012, according to the complaint.

L. Lin Wood, an attorney for Mariner, said yesterday in a phone interview that the sale of Mariner Medical Supply to Omnicare wasn’t a disguised kickback. Mariner Medical Supply “was not a shell company,” Wood said. “It was a fair price for the company and Mariner is owed the $40 million.”

The case is Mariner Health Care Inc. v. Troutman Sanders LLP, State Court of Fulton County, Georgia (Atlanta).

For more, click here.

CME Lawsuit Over CFTC’s Swap-Database Rule Faulted by DTCC

CME Group Inc. (CME:US)’s lawsuit over U.S. Commodity Futures Trading Commission swap-data rules will undermine efforts to boost transparency following the 2008 credit crisis, the Depository Trust & Clearing Corp. said.

The suit, filed in federal court on Nov. 8, “threatens to dismantle and disrupt the entire regulatory regime statutorily mandated by the Dodd-Frank Act in order to preserve CME’s exclusive access to data that it acquires through its role as a derivatives clearing organization,” DTCC General Counsel Larry E. Thompson said in a letter to the CFTC Nov. 11.

CME, the Chicago-based exchange operator that runs a swaps clearinghouse, is seeking an injunction against CFTC rules for reporting private trade information, claiming that submissions to so-called swap-data repositories would be redundant. DTCC, based in New York, is one of the firms given CFTC approval to run data repositories for interest rate and credit-default swaps, among other types of trades.

Dodd-Frank, the 2010 financial-regulation overhaul, directed the CFTC and Securities and Exchange Commission to write rules for swap-data repositories to give regulators a better view on prices and volume in a $648 trillion market dominated by banks including Goldman Sachs Group Inc. (GS:US), JPMorgan Chase & Co. (JPM:US) and Deutsche Bank AG. (DBK)

The CFTC has granted provisional registration to DTCC Data Repository LLC and ICE Trade Vault LLC, a repository operated by Atlanta-based Intercontinental Exchange Inc. for information on energy, interest rate, credit and other swaps.

“One of the essential parts of financial reform is promoting transparency; transparency both to the public and to regulators,” CFTC Chairman Gary Gensler said in a Sept. 20 interview after the agency announced DTCC’s registration.

Steve Adamske, the CFTC’s spokesman, didn’t respond to telephone and e-mail requests for comment while U.S. government offices are closed for observance of Veterans Day.

The case is Chicago Mercantile Exchange Inc. v. U.S. Commodity Futures Trading Commission, 12-cv-01820, U.S. District Court, District of Columbia (Washington).

For more, click here.

To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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Companies Mentioned

  • LUK
    (Leucadia National Corp)
    • $23.44 USD
    • -0.40
    • -1.71%
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