Bloomberg News

Wachtell, Cravath on Martin Marietta Deal: Business of Law

January 29, 2014

Cravath Swaine & Moore LLP and Wachtell, Lipton, Rosen & Katz are legal advisers in Martin Marietta Materials Inc. (MLM:US)’s $2.7 billion acquisition of cement maker Texas Industries Inc. (TXI:US)

From Cravath, representing Martin Marietta, are partners Scott A. Barshay and George F. Schoen, mergers and acquisitions, Eric W. Hilfers, executive compensation and benefits, Andrew W. Needham tax and Matthew Morreale, environmental.

The Wachtell partners representing Texas Industries are Mark Gordon, Daniel A. Neff and Gordon S. Moodie, corporate, T. Eiko Stange, tax, Adam J. Shapiro, executive compensation and benefits, and Nelson O. Fitts, antitrust.

The acquisition is the biggest North American deal in the field in five years, tapping into a construction rebound in California and Texas.

Under the terms, each Texas Industries share (TXI:US) will be exchanged for 0.7 Martin Marietta share, according to a statement yesterday. That valued Texas Industries at $71.95 a share, based on Jan. 27 closing prices, or an implied increase of more than 15 percent from Dec. 12, according to the statement, before Bloomberg reported that the company was exploring a sale.

Buying Dallas-based Texas Industries gives Martin Marietta an entry into the cement market as home construction bounces back, after U.S. housing starts rose 18 percent to 923,400 last year for the most since 2007. Martin Marietta produces crushed stone, gravel and sand, which are known as aggregates and are mixed with cement to produce concrete.

For more on the deal, click here.

Druckenmiller Lawyer Takes On Hedge Funds Over Unfair Contracts

Stan Druckenmiller, one of the top-performing money managers of the past three decades, discovered a hard truth when he started investing in other hedge funds: Most don’t treat their clients fairly.

Partnership agreements frequently leave investors on the hook for legal fees associated with the misconduct of fund employees, or allow managers to unilaterally suspend redemptions for any reason, Gerald Kerner, Druckenmiller’s lawyer since 1997, wrote in a paper presented on Jan. 27 to a group of endowments and foundations.

Now Kerner is fighting back, pushing for changes in an industry where managers wield clout with their investors and typically charge the highest fees in the asset-management business. He is urging investors to push for contract changes and refuse to invest with funds that won’t agree to change their terms.

The unfair provisions “can cost investors many millions of dollars down the road if not remedied,” Kerner wrote in the 14-page paper titled: “Hedge Funds: Problems Under the Hood.”

“I prefer to give investment dollars to sponsors whose documents match their good character so that in the unlikely event down the road that the contents of the documents matter, they provide the protection that I want to have,” Kerner wrote.

Kerner wants documents changed to make clear that managers are responsible for any legal fees that result from employee misconduct, even if the manager did nothing wrong himself, because that “comes with the territory of being in charge and being paid fees to be in charge,” he wrote.

Most agreements don’t even hold the managers to their own contracts, Kerner said. The standard wording says that a fund manager isn’t liable for losses unless they are the result of gross negligence, willful misconduct or the violation of a law. The clause should also include the “material breach of the limited partnership agreement” in the list of bad acts, he wrote.

In the paper, Kerner discusses his own experience trying to get documents changed. In many instances, the investment managers said they weren’t even aware of the contents of their own documents. Nor are most investors, since he was often told that he was the first person to ever complain.

He regularly got push back from the firm’s lawyers, who told him that they wouldn’t change the documents because they were industry standard.

For more, click here.

Legal Consultant Morrison Rejoins Consulting Firm Altman Weil

Rees Morrison has joined legal management consultancy Altman Weil, Inc. as a principal and co-head of its law department consulting group. Morrison has more than 25 years of experience advising law departments on cost control, department structure, process improvement and outside counsel management, among other matters. He recently developed a new practice in data analytics for law departments.

Before joining Altman Weil, Morrison consulted independently for five years and held partnerships at several legal consulting firms, including an earlier tenure at Altman Weil from 1998 to 2002.

Law Firm Moves

Patton Boggs, Venable and Ogletree Add Partners to Their Ranks

Patton Boggs LLP has added Daniel C. Stewart to its bankruptcy and restructuring team in Dallas. Stewart joins the firm from Vinson & Elkins LLP, where he was a partner in the Dallas office and founder of that firm’s restructuring and reorganization practice in 1999.

Venable LLP announced that Patrick J. Boyle and Jessie Beeber have joined as partners in the firm’s New York office. The two lawyers, who according to a statement from the firm initially worked together in the 1990s, were previously partners at Frankfurt Kurnit Klein & Selz P.C. Both specialize in complex corporate liability cases. 

Maria Fernandez Gandarez is joining Ogletree, Deakins, Nash, Smoak & Stewart, P.C. a labor and employment law firm representing management, as a shareholder in the firm’s New York office. Gandarez, who specializes in immigration law, previously practiced in the New York office of Fragomen, Del Rey, Bernsen & Loewy LLP.

To contact the reporter on this story: {Ellen Rosen} in New York at

To contact the editor responsible for this story: Michael Hytha at

The Good Business Issue

Companies Mentioned

  • MLM
    (Martin Marietta Materials Inc)
    • $111.49 USD
    • -0.20
    • -0.18%
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