Bloomberg News

Antitrust’s Baer, Kirkland, Weil Gotshal: Business of Law

January 02, 2013

William Baer, a Washington antitrust lawyer and former Federal Trade Commission official, was confirmed to head the U.S. Justice Department’s antitrust division.

Baer’s nomination as assistant attorney general, which had been stalled in Congress for most of the past year, was confirmed Dec. 30 by a Senate vote of 64-26.

Baer, a partner at Arnold & Porter LLP, 62, will become the first fully confirmed head of the antitrust division since former chief Christine Varney left in August 2011. Since then, the division has been run by acting chiefs, including Sharis Pozen, Joseph Wayland and Renata Hesse.

Baer, named one of the “Decade’s Most Influential Lawyers” by the National Law Journal in 2010, is a former director of the Federal Trade Commission’s competition bureau and has represented corporate clients including General Electric Co. (GE:US), Intel Corp. (INTC:US) and Cisco Systems Inc. (CSCO:US) in private practice.

While at the FTC he also brought an antitrust action against chipmaker Intel and oversaw challenges to Time Warner Inc. (TWX:US)’s acquisition of Turner Broadcasting System, the merger between Ciba-Geigy AG and Sandoz AG to create Novartis AG (NOVN) and the exclusionary tactics of Toys ’R’ US.

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News

Yahoo Hires Mexican Firm to Handle $2.7 Billion Lawsuit

Yahoo! Inc. hired Mexican law firm Quijano Cortina y de la Torre to defend it from a $2.7 billion non-final judgment related to a failed telephone directory partnership, according to a report from Business Insider.

Francisco Xavier Cortina Cortina, a partner at the law firm, confirmed to the paper that it had been hired to represent Yahoo.

The Sunnyvale, California-based company was sued in the 49th Civil Court of the Federal District of Mexico City by Worldwide Directories, which claimed Yahoo had breached its contract with the Mexican company to publish and print online telephone directories in Mexico.

The court ruled that Yahoo had wrongly terminated its agreement, finding that it had resulted in an actual loss of business and also potential gains in other countries causing the judgment to reach the billions, according to the publication.

Yahoo said in a Nov. 30 statement that the “claims are without merit” and it “will vigorously pursue all appeals,” of the non-final award.

Quijano Cortina y de la Torre is a small five-person law firm based out of Mexico City that specializes in commercial and civil litigation, the Business Insider reported.

LodgeNet to File Bankruptcy, Weil Gotshal Restructuring Counsel

LodgeNet Interactive Corp. (LNET:US), a provider of on-demand movies to hotel rooms, said it will seek bankruptcy protection with an agreement for affiliates of Colony Capital LLC to invest $60 million.

The company hired Weil, Gotshal & Manges LLP as restructuring counsel and Leonard, Street and Deinard (1350L:US) as corporate counsel, according to a Dec. 31 statement.

The Colony affiliates will become the Sioux Falls, South Dakota-based company’s controlling shareholder under the restructuring. Los Angeles-based Colony will receive new common stock representing full ownership, according to the statement.

LodgeNet hasn’t posted an annual profit since 2006. Last year, 95 percent of its revenue came from the hotel industry, with Hilton Worldwide and Marriott International Inc. accounting (LNET:US) for about a third of sales, according to the company’s filings.

LodgeNet said it expects unsecured creditors will be paid in full at the end of the Chapter 11 process. A steering committee of lenders holding the company’s debt will support a five-year extension of its $346 million secured credit facility, according to the statement. Akin, Gump, Strauss, Hauer & Feld LLP and CDG Group LLC were advisers to the agent for the lenders, according to the statement.

Colony, with $38 billion in assets under management, also has invested in Fairmont Raffles Hotels International, hotel operator Accor SA and Amanresorts International Pte, according to LodgeNet’s statement. Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor LLP and Sullivan & Cromwell LLP provided legal counsel to Colony.

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Deals

Kirkland & Ellis, Wachtell Lipton Advise on Duff & Phelps Deal

Kirkland & Ellis LLP is providing legal counsel to Duff & Phelps Corp. (DUF:US) in a deal to sell the investment-banking firm to a group of buyers including Carlyle Group LP for $665.5 million.

The buyers, also including Swiss bank Pictet & Cie, Stone Point Capital LLC and Geneva-based Edmond de Rothschild Group, are being advised by the law firm of Wachtell, Lipton, Rosen & Katz.

The buyers will pay $15.55 a share, 19 percent more than Duff & Phelps’s closing price on Dec. 28. The transaction is expected to be completed in the first half, the companies said in a Dec. 30 statement.

The group of buyers will help New York-based Duff & Phelps continue its international expansion, according to the statement. Revenue at the 80-year-old firm, which also provides financial-advisory services, is predicted to rise 17 percent this year to $465.8 million, the average of analysts’ estimates (DUF:US) compiled by Bloomberg.

The Duff & Phelps merger agreement provides for a “go- shop” period ending on Feb. 8, during which the company can solicit and receive alternative proposals. Duff & Phelps would pay a break-up fee of about $6.65 million if it gets a higher bid and ends the agreement before March 8.

Duff & Phelps, started in 1932 to provide investment research, was a financial adviser to the examiner in the Lehman Brothers Holdings Inc. bankruptcy in 2009 and an administrator for the Rangers Football Club Plc in the largest soccer club insolvency in U.K. history, according to its website.

Willkie Farr Representing Warburg Pincus in JHP Acquisition

Willkie Farr & Gallagher LLP is acting as legal adviser to New York-based private-equity firm Warburg Pincus LLC in its deal to buy a majority of specialty-drug company JHP Pharmaceuticals LLC.

Wachtell, Lipton, Rosen & Katz was hired as the legal adviser to the special committee of the Board of Directors of JHP Holdings LLC.

Warburg is buying a majority of the company from Morgan Stanley (MS:US) Principal Investments for about $195 million. The acquisition was made on a “debt-free, cash-free basis,” JHP, a 5-year-old firm based in Parsippany, New Jersey, said in a Dec. 31 statement. JHP co-founder and Chief Executive Officer Stuart Hinchen and other managers retained ownership interests. Additional terms weren’t disclosed.

JHP, which develops and makes aseptic injectable drugs, was created by Hinchen and Peter Jenkins in 2007 with Morgan Stanley’s backing.

Warburg Pincus, a buyout sponsor and venture-capital firm started by the late Lionel Pincus in 1966, has more than $30 billion in managed assets. It closed its latest flagship investment fund, a $15 billion vehicle, in 2007.

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Firm News

Midwest Law firm Spencer Fane Announces Management Change

Spencer Fane Britt and Browne LLP, a Midwest law firm with offices in five cities across Kansas, Missouri and Nebraska, announced in a Dec. 31 statement that Patrick J. Whalen would take over as the firm’s new chairman. Whalen, who has degrees in economics, business and law, succeeds Michael F. Saunders, who led the firm for 15 years.

“I am proud of what Spencer Fane has accomplished over the past 15 years. Pat Whalen is a superb choice to handle the next stage in the law firm’s direction and growth,” Saunders said in the statement.

The company also announced on Dec. 31 that Thomas W. Hayde, an associate with the firm since 2006, was promoted to the partnership. He focuses on commercial disputes, insurance coverage, product liability and toxic tort litigation. Hayde received a Juris Doctorate from Washington University in St. Louis.

“His election will strengthen the firm’s St. Louis-based litigation practice,” Whalen said of Hayde in a statement.

Moves

American Equity Appoints William R. Kunkel as General Counsel

American Equity Investment Life Holding Company, an underwriter of index and fixed-rate annuities, appointed William R. Kunkel as its general counsel, according to a company statement.

“We are delighted to announce Bill’s appointment as general counsel. The depth and breadth of his professional experience, strong leadership abilities, and knowledge of American Equity’s business having represented us for more than 15 years make him a natural fit,” Executive Chairman, David J. Noble, and Chief Executive Officer John M. Matovina, said in the statement.

Kunkel was a partner at the Chicago offices of law firm Skadden, Arps, Slate, Meagher & Flom LLP, where he joined in 1984, before retiring in June. His practice focused on mergers and acquisitions, corporate finance, and other corporate governance and securities matter, according to the Dec. 31 statement. Kunkel is a graduate of Harvard Law School and Creighton University.

“I am excited to join the American Equity family and management team at this important time in the company’s development,” said Kunkel on the appointment. “I look forward to using my talents and experience to help the company achieve even greater success in the years that follow.”

Maryland Governor O’Malley Names New Appellate Judge

Maryland Governor Martin O’Malley named Douglas R. M. Nazarian, chairman of the state’s Public Services Commission, to the Court of Special Appeals, the state’s intermediate appellate court, according to the Washington Post.

Prior to his appointment as the PSC chairman, Nazarian served as the commission’s general counsel. Nazarian was a lawyer in private practice and taught at the University of Maryland Francis King Carey School of Law before joining the commission, according to the Post’s Dec. 29 report.

“I am confident that he has the intellect and organizational skills necessary to meet the needs of the Court of Special Appeals and to render well-reasoned decisions,” O’Malley said in a statement.

Litigation

Knight Capital Group Sued by Investor Over Getco Bid

Knight (KCG:US) Capital Group Inc., the trading firm that closely avoided bankruptcy last year after computer errors, was sued by an investor claiming the stock is undervalued in a $3.75-a-share takeover by Getco LLC.

Shareholder Ann Jimenez McMillan, represented by law firm Rigrodsky & Long PA, sued Knight and directors in Delaware Chancery Court arguing they are obligated to seek out the best price for company’s shares and the “locked-up” Getco deal violates those duties, according to the complaint made public Dec. 31.

The price is “unfair and grossly inadequate,” and will deny investors “their right to share proportionately and equitably in the true value of the company’s valuable and profitable business, and future growth,” Rigrodsky lawyers said in court papers.

Chicago-based Getco agreed to buy Knight, based in Jersey City, New Jersey, in December in a $1.4 billion deal, beating rival suitor Virtu Financial LLC, according to people familiar with the bidding.

Knight lost more than $450 million in August when improperly installed software triggered unintended orders. Getco and five other financial firms provided $400 million to help Knight in exchange for convertible securities representing more than 70 percent of its equity.

In the lawsuit, McMillan asks for class-action, or group status, on behalf of all outside stockholders, unspecified damages, and an order to stop the deal under its present terms.

The case is McMillan v. Knight Capital Group, CA8163, Delaware Chancery Court (Wilmington).

To contact the reporter on this story: Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net.

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


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