Cravath, Weil, Kirkland, Skadden, Sullivan: Business of Law

Linde AG agreed to acquire Lincare Holdings Inc. for about $3.8 billion to add U.S. oxygen and respiratory therapy services delivered to the home, in the German company’s biggest acquisition since 2006.

Cravath Swaine & Moore LLP and Morgan Stanley acted as legal and financial advisers to Linde. Weil, Gotshal & Manges LLP and JP Morgan Chase & Co. acted as legal and financial advisers to Lincare.

Cravath’s corporate partners on the deal are Richard Hall and Mark I. Greene, with Michael L. Schler on tax. Greenberg Traurig LLP shareholder William Eck acted as health regulatory counsel to Linde.

Weil’s team was spearheaded by chairman of the firm’s corporate department and co-head of the firm’s New York private equity and mergers and acquisitions practice, Michael Aiello. It also included tax partner Ken Heitner; environmental partner Annemargaret Connolly; IP partner Michael Epstein; antitrust partner John Scribner; and benefits partner Michael Kam.

Linde will pay $41.50 a share for Lincare, using a loan and a share sale of as much as 1.5 billion euros ($1.9 billion), the Munich-based industrial-gas supplier said. That’s 64 percent more than the price on June 26, before a media report on talks between the companies. Linde shares fell as much as 5 percent in Frankfurt trading.

Chief Executive Officer Wolfgang Reitzle has made health care a growth area and agreed to buy Air Products & Chemicals Inc.’s home-care business in January. The Lincare purchase reunites two business linked a century ago and will double Linde’s North American gases sales. Reitzle said he tracked Lincare as a potential target for five years and was aware of rival interest. In the end, negotiations were speedy, he said.

Based on estimates for 2012, Linde is paying 8.93 times earnings before interest, taxes, depreciation and amortization compared with a median of 8.4 times, according to data compiled by Bloomberg. It’s unlikely to recover its cost of capital before 2015, Bank of America Merrill Lynch analyst Laurent Favre said.

The total price is $4.6 billion including about $800 million in assumed debt, said Matthias Dachwald, a spokesman for Linde. The transaction will be paid for mainly with a $4.5 billion loan that will be refinanced through debt and equity issuances, with expected completion in the fiscal third quarter.

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Bristol-Myers to Buy Diabetes Drugmaker Amylin for $5.3 Billion

Kirkland & Ellis LLP advised Bristol-Myers Squibb Co. on the $5.3 billion acquisition of Amylin Pharmaceuticals Inc. Skadden Arps Slate Meagher & Flom LLP advised Amylin.

The Kirkland team included New York-based corporate partners David Fox, Daniel Wolf, Joshua Zachariah and David B. Feirstein.

Skadden’s New York mergers and acquisition partners included: Nancy Lieberman and Ann Beth Stebbins.

The purchase comes a month after Bristol’s top seller, the blood-thinner Plavix with $7.1 billion in sales last year, began facing generic competition. In 2013, the New York-based company loses patent protection on its $1.6 billion HIV drug, Sustiva.

Under the agreement announced June 29, Bristol-Myers will pay $31 a share in cash, a 10 percent premium to the June 29 closing price for San Diego-based Amylin. At the same time, AstraZeneca Plc, based in London, will pay Bristol $3.4 billion to help develop Amylin’s drug portfolio, the companies said.

AstraZeneca, Paris-based Sanofi and Merck & Co., of Whitehouse Station, New Jersey, also made offers during a bidding process, people with knowledge of the process had said.

Revenue at Amylin surpassed $650 million last year and may rise about 5 percent in 2012, according to analysts’ estimates compiled by Bloomberg. The company may generate as much as $1.5 billion in annual sales from Byetta and Bydureon, Phil Nadeau, a Cowen & Co. analyst in New York, wrote this year.

For Bristol, the purchase is the largest of 19 since 2007, when it began a so-called string of pearls acquisition strategy designed to revitalize the company in the face of patent losses and produce a more diverse stable of products.

Bristol-Myers’s own experimental diabetes product, dapagliflozin, also called Forxiga, failed to win U.S. marketing approval in January, when the Food and Drug Administration asked for more data to assess risks and benefits for the treatment, being developed with AstraZeneca. It’s awaiting approval in Europe, and may be cleared later in the U.S.

The boards of Bristol-Myers and Amylin endorsed the deal, according to the statement. Including Amylin’s debt and a payment owed to Eli Lilly & Co. of about $1.7 billion, the deal is valued at about $7 billion.

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GE Sells Property Lending Unit to EverBank for $2.51 Billion

General Electric Co. agreed to sell Business Property Lending Inc., a unit of its GE Capital Corp. division, to EverBank Financial Corp. for $2.51 billion in cash.

Weil Gotshal & Manges LLP advised GE, while Sullivan & Cromwell LLP represented EverBank Financial Corp.

Weil partners included: Jon-Paul Bernard, mergers and acquisitions, and Kenneth Heitner, tax, Chayim Neubort, tax, Michael Kam, benefits, Annemargaret Connolly, environmental, John Dedyo, structured finance, and Heath Tarbert, bank regulatory.

The S&C New York-based team included financial institutions partners Mark Menting and C. Andrew Gerlach along with executive compensation and benefits partner Matthew Friestedt.

The deal includes $2.44 billion in performing commercial real estate debt and servicing rights on $3.1 billion of loans securitized by GE Capital, the companies said yesterday in a statement. The transaction is expected to close next quarter, pending regulatory approval, EverBank said.

Chief Executive Officer Jeffrey Immelt is exiting some businesses tied to real estate as he shrinks the size of GE Capital’s balance sheet after $32 billion of credit losses during the financial crisis. Stamford, Connecticut-based GE Capital sold its Irish mortgage unit last month to Pepper Home Loans Group, Australia’s largest non-bank mortgage lender.

GE curbed Business Property Lending’s originations as credit markets froze after Lehman Brothers Holdings Inc.’s 2008 collapse, according to a presentation on EverBank’s website. New loans fell 97 percent to $43 million in 2009, and are on pace in 2012 for $317 million, the Jacksonville, Florida-based bank said.

EverBank, which had its initial public offering on May 2, said the acquisition would immediately provide a “low double-digit” boost to earnings per share.

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Dell Agrees to Buy Quest for $2.4 Billion, Gaining Software

Dell Inc. agreed to buy Quest Software Inc., a maker of programs to manage corporate computer systems, for $28 a share, ending a bidding contest with Insight Venture Partners.

The acquisition is worth $2.4 billion, net of cash and debt, the Round Rock, Texas-based company said in a joint statement yesterday with Quest. The transaction is expected to close in Dell’s fiscal third quarter.

Skadden Arps Slate Meagher & Flom LLP is representing Dell Inc. Quest was represented by Cadwalader Wickersham & Taft LLP, Latham & Watkins LLP and Potter Anderson & Corroon LLP.

Skadden lawyers on the deal include New York mergers-and-acquisitions partner Allison Schneirov and Palo Alto, California, mergers and acquisitions partner Kenton King.

Dell’s in-house team includes Larry Tu, Janet Wright, Mark Mouritsen, Kim Erlanson and Robert Potts, Skadden said in a statement.

Cadwalader’s team included corporate partners Ron Hopkinson and William P. Mills and tax partner Linda Swartz.

Latham’s team was led by Orange County corporate partners Charles Ruck, Scott Shean and Michael Treska. Advice was also provided on benefits and compensation matters by New York partner Bradd Williamson; on competition matters by Washington partner Mike Egge and Jason Cruise; on tax by Los Angeles partner Pardis Zomorodi; on intellectual property matters by Silicon Valley partner Anthony Klein; and finance matters by Los Angeles partner Glen Collyer.

Potter Anderson partners Mark A. Morton and T. Brad Davey are representing the special committee to Quest’s board of directors, the firm said.

The purchase would cap a monthslong bidding war for Quest and fits with Dell’s aim to add technology that helps customers outfit data centers for handling storage and cloud computing. Quest’s software lets companies administer databases and servers, as well as back up information and recover lost data.

“Quest Software plays in Dell’s sweet spot,” said Abhey Lamba, an analyst at Mizuho Securities USA Inc., in a research report yesterday. “The combination could help Dell jump start its software business and would be margin accretive.”

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Dewey Collapse May Have Slowed Law Firm Mergers, Consultant Says

Law firm mergers and acquisitions slowed in the second quarter this year, perhaps as a result of the “Dewey Effect,” legal consulting firm Altman Weil reported yesterday.

There were 11 mergers in the second quarter of 2012, after six quarters in which deals averaged 15 a quarter, the firm said. Dewey & LeBoeuf LLP filed for bankruptcy protection in New York in May after weeks of partner departures.

“The decline in law firm mergers and acquisitions in the second quarter can be attributed to what we’re calling the ‘Dewey Effect’,” Ward Bower, an Altman Weil principal, said in a statement. “The demise of Dewey LeBoeuf this spring put over a thousand lawyers and hundreds of millions of dollars of business into play, shifting the short-term focus of many law firms to those opportunities.”

There were seven deals in April, two in May and two in June. Ten of the 11 combinations involved law firms with fewer than 10 lawyers. The 11th was a merger of two small Columbus, Ohio, law firms, according to Altman Weil. Two large firms, Pittsburgh’s Buchanan Ingersoll & Rooney and Cincinnati-based Frost Brown Todd LLC, both acquired seven-lawyer firms in the second quarter.

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Firm News

Clifford Chance Revenue Rises 7% on Growth in Asia-Pacific Work

Clifford Chance LLP, the highest grossing firm of the so-called magic circle, said revenue rose 7 percent to 1.3 billion pounds ($2.04 billion) on new business in Asia and Australia following local mergers.

Asia-Pacific revenue rose 28 percent in the 2011-12 financial year and accounted for 14 percent of the firm’s fee income, Clifford Chance said in a statement. Average profit per equity partner was 1.1 million pounds, up from 1 million a year earlier.

The firm said its growth “particularly against the backdrop of continued uncertainties in the euro zone which have affected clients and markets globally,” Managing Partner David Childs said today in a conference call with reporters. The firm is investing for the long term, he said, as “this has all the signs of a pretty tough year.”

Allen & Overy LLP announced today a 6 percent rise in revenue to 1.18 billion pounds. The other two firms in the magic circle of Britain’s largest firms that release financial data will publish the information later this week.

Clifford Chance, once the largest globally by income, reported a 2 percent rise in income in the year earlier and an eight percent rise in average profit per equity partner. This is the first full year to include revenue from firms in Perth and Sydney which merged with Clifford Chance in 2011.

Slaughter and May, the fifth member of the magic circle, isn’t a limited liability partnership and so doesn’t release its financial details.


Yahoo General Counsel Callahan Resigns, Bell Will Step In

Yahoo! Inc. general counsel, Michael J. Callahan, resigned effective July 9, according to a company filing.

Callahan said in a letter dated June 28 and filed with the U.S. Securities and Exchange Commission that he was leaving to “move on to new opportunities.”

Ron Bell will serve in an interim role for Callahan, according to letter to staff from Chief Executive Officer Ross Levinsohn.

Scott Thompson stepped down in May as CEO as a result of misstatements about his academic record. He had been CEO since January, replacing Carol Bartz who was fired in September. Levinsohn stepped in as interim leader after Thompson’s exit.

There has also been turnover in the legal department, which has lost almost 20 percent of its lawyers since Jan. 2011, according to the Recorder, a legal trade publication.

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