July 31 (Bloomberg) -- Kirkland & Ellis LLP advised Community Health Systems Inc., the second-largest U.S. hospital chain, which agreed to buy Health Management Associates for $3.9 billion in cash and stock. Weil, Gotshal & Manges LLP is representing Health Management Associates.
The Kirkland team was led by New York partners Steve Fraidin, Thomas Christopher and Michael Brueck.
The Weil team included partners Michael Aiello and Matthew Gilroy, mergers and acquisitions; Matt Bloch, capital markets; Douglas Urquhart, banking/finance; Steven Bernstein, regulatory; Helyn Goldstein, tax; Paul Wessel, employee benefits; and Charan Sandhu, intellectual property.
Health Management holders will receive $13.78 a share, the companies said in a statement yesterday. Investors also will get a contingent value right that may add as much as $1 a share based on the outcome of legal matters, the companies said.
The sale came amid pressure from Glenview Capital Management LLC, which owns about 15 percent of Health Management stock. Glenview proposed ousting the Naples, Florida-based company’s board and management because of its “substandard strategic and financial approach.” After the deal closes, Franklin, Tennessee-based Community Health will operate about 206 hospitals in 29 states.
Including net debt, the purchase is valued at about $7 billion, according to data compiled by Bloomberg that used Community Health’s average price for the last 20 days of trading to calculate the stock portion of the bid. The offer is equal to 8.3 times Health Management’s earnings before interest, taxes, depreciation and amortization for the last 12 months, the data show. Assumed debt is $3.7 billion, according to the statement from the companies.
The takeover is the biggest of a hospital company since 2006, when HCA Inc. was acquired by buyout firms including KKR & Co. for about $33 billion including debt, according to data compiled by Bloomberg.
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Law Firm News
King & Wood Mallesons, SJ Berwin to Form $1 Billion Law Firm
King & Wood Mallesons and SJ Berwin LLP agreed to merge to form a law firm with about $1 billion in revenue and more than 2,700 lawyers.
From Nov. 1, the combined firm will have more than 550 partners in 30 locations, according to a joint statement today.
The deal adds London-based SJ Berwin to Asia’s largest law firm, formed last year by the combination of Beijing-based King & Wood and Sydney-based Mallesons Stephen Jaques. It follows the creation last month of Norton Rose Fulbright, a 3,800-attorney firm which includes partnerships from London, Houston, Australia, Canada and South Africa.
Partners at the China, Hong Kong, Australia and London firms all gave widespread support to the merger in votes that concluded today, King & Wood Mallesons Global Managing Partner Stuart Fuller said at a media briefing.
SJ Berwin’s senior partner Stephen Kon will become a deputy chairman of the combined firm. Wang Junfeng, who founded King & Wood in 1993, remains chairman, based in Beijing.
The combination with SJ Berwin will provide clients with an international platform for inbound and outbound Chinese investment, King & Wood Mallesons’ Managing Partner China Wang Ling said.
Pinsent Lawyer Joins London Energy Practice of K&L Gates
The London office of K&L Gates LLP added Mike Stewart, formerly of Pinsent Masons LLP, as a partner in its energy, infrastructure and resources practice.
Stewart focuses on disputes arising from major energy and infrastructure projects, the firm said. He represents owners and contractors, acting as project counsel and appearing in international arbitrations, and has experience with the FIDIC form of contract after working in Turkey, Ukraine, Azerbaijan, Jordan, India and Sri Lanka.
“Our international energy, infrastructure and resources arbitration practice has seen real momentum in the past 12 months,” Tony Griffiths, administrative partner of K&L Gates’s London office, said in a statement. “With his track record in international matters, Mike is an important addition to our growing team.”
K&L Gates has lawyers at 48 offices in the U.S., Asia, Australia, Europe, the Middle East and South America.
Daniel Begian Joins Ogletree Deakins’ St. Louis Office
Ogletree, Deakins, Nash, Smoak & Stewart PC hired Daniel R. Begian as a shareholder in its St. Louis office. He’s joining the firm from the Lowenbaum Partnership.
Begian, who has more than 30 years’ experience in labor and employment matters in St. Louis, will work in the firm’s traditional labor relations, employment law, and workplace safety and health practice groups. He has experience in contingent workforce issues, arbitration, bargaining, proceedings before the National Labor Relations Board and election campaigns.
He will be reunited with former colleagues including shareholders Bob Stewart, Stan Schroeder and Bill Lawson, who joined the firm in January, and Burt Garland, the firm said.
Ogletree Deakins has more than 650 lawyers in 44 offices in the U.S. and in Europe.
New York Corporate Partner Grandis Joins Loeb & Loeb
Loeb & Loeb LLP announced that Michael Grandis joined the firm’s New York office as a partner in the corporate department. He most recently was a partner in the corporate and commercial practice at Ingram Yuzek Gainen Carroll & Bertolotti, LLP in New York.
Grandis has almost 15 years of experience, primarily in public and private mergers and acquisitions, venture capital and private-equity financings, as well as corporate governance counseling, the firm said. His practice also includes intellectual property and licensing matters, employment agreements, corporate governance and other general corporate matters.
Loeb & Loeb has more than 300 attorneys at six offices in the U.S. and Beijing.
HP Says Ex-SEC General Counsel Advising on Autonomy Deal Probe
Hewlett-Packard Co. said it hired a former U.S. Securities and Exchange Commission general counsel and interviewed 25 people in a company investigation of alleged fraud at its Autonomy unit.
Ralph Ferrara, a partner at Proskauer Rose LLP and ex-general counsel at the SEC, is leading a probe by a three-member committee of independent directors investigating shareholder allegations that Hewlett-Packard ignored warnings about accounting irregularities and failed to vet its finances before acquiring the British software maker, the company’s lawyers said in filings yesterday in federal court in San Francisco.
Hewlett-Packard, the largest personal computer maker, faces shareholder lawsuits stemming from its Nov. 20 announcement that it was taking an $8.8 billion writedown on the value of Autonomy, which it agreed to buy for $10.3 billion in 2011. Hewlett-Packard alleges it was a victim of fraud and that Autonomy overstated its revenue, growth and prospects. Autonomy’s ex-chief executive officer, Michael Lynch, has denied HP’s claims and said the company botched the acquisition.
HP’s board committee has conducted preliminary interviews of 25 “key individuals” and reviewed documents, and its lawyers have retained accounting experts in the investigation, company lawyer Marc Wolinsky said in a filing requesting that the so-called derivative shareholder lawsuit be put on hold until Jan. 10.
The case is In Re Hewlett-Packard Co. Shareholder Derivative Litigation, 12-06003, U.S. District Court, Northern District of California (San Francisco).
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JPMorgan to Pay $410 Million to Settle U.S. Energy Probe
JPMorgan Chase & Co. will pay $410 million to settle U.S. Federal Energy Regulatory Commission allegations that the bank manipulated power markets in California and the Midwest from 2010 to 2012.
The bank agreed to pay a U.S. civil penalty of $285 million and return $125 million in ill-gotten profits to electricity ratepayers, according to a FERC statement yesterday. New York-based JPMorgan, the largest U.S. bank by market value, said the settlement will “put this matter behind it.”
JPMorgan “employed a fraudulent device, scheme or artifice, made false statements or material omissions, or engaged in a course of business that operated or would operate as a fraud on electricity market participants,” the agency said yesterday in an order posted on its website.
FERC said a JPMorgan energy-trading unit had engaged in 12 bidding strategies in wholesale energy markets from September 2010 to November 2012, resulting in tens of millions of dollars in overpayments from the grid operators. The agency announced the violations yesterday after investigating the bank’s energy-trading practices for more than a year.
Of the $410 million, $124 million will go to the California electric-grid operator and $1 million to an operator in the Midwest, according to the agency. The bank accepted the facts in the settlement agreement without admitting or denying wrongdoing, the commission said in a statement.
Francis Dunleavy, Andrew Kittell and John Bartholomew, who the agency said devised the bidding strategy, are still employed by the company, according to the settlement. Brian Marchiony, a JPMorgan spokesman, declined to comment on their current roles or whether the company would cut their bonuses or Masters’ compensation.
The three traders didn’t agree to a settlement with the commission, Gibson, Dunn & Crutcher LLP, the law firm representing Dunleavy, Kittell and Bartholomew, said in a statement. The agency decided not to pursue sanctions against them after they explained that their conduct was lawful, it said.
“The commission’s decision to voluntarily settle with JPMorgan and not proceed against the individuals can only be read as the commission correctly concluding that no case or findings against the individuals could be sustained in a court of law,” William Scherman, their lawyer, said in the statement.
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Penn State Lawyer Made Light of Sandusky Probe, Witness Says
Former Pennsylvania State University General Counsel Cynthia Baldwin brushed aside concerns about a grand jury investigation into former football coach Jerry Sandusky in early 2011, calling it a “fishing expedition,” the school’s communications director said.
In a March 2011 conversation, Baldwin told Lisa Powers, Penn State’s spokeswoman, that it was the fourth time a grand jury had convened to investigate Sandusky and the school and there was no evidence of wrongdoing, Powers testified yesterday in state court in Harrisburg, Pennsylvania.
“She said there was nothing to talk about and it was a fishing expedition,” Powers said of the phone conversation. “She said we have nothing to say because there were no findings yet.”
Powers testified at a hearing over charges against former Penn State President Graham Spanier and two other officials for their role in an alleged cover-up of accusations against Sandusky, a former football defensive coordinator. Sandusky was convicted in June 2012 and sentenced in October to at least 30 years in prison for sexually molesting 10 boys over 15 years.
Magisterial District Judge William Wenner in Harrisburg yesterday ordered Spanier, former Athletic Director Timothy Curley and Gary Schultz, a retired vice president in charge of university police, to face trial on charges including endangering the welfare of children, conspiracy and perjury.
Spanier, Curley and Schultz have all denied wrongdoing in the case, which is based in part on their grand jury testimony and e-mails and documents dating back to 1998.
ResCap Judge Won’t Disqualify Company, Creditor Lawyers
Residential Capital LLC’s bankruptcy judge said he won’t disqualify key lawyers and advisers from participating in part of the case, rejecting a motion by a group of noteholders.
U.S. Bankruptcy Judge Martin Glenn in Manhattan said a group of junior secured noteholders had been trying to “derail” the bankruptcy. He denied a motion by the group that would have disqualified lawyers for ResCap and a committee of unsecured creditors from participating in any hearings on claims that ResCap’s units may hold against one another.
The group said in court papers that such claims could affect “the distribution of at least $500 million and likely in excess of a billion dollars to creditors.” It claimed the attorneys had a conflict of interest because of the intercompany claims.
Glenn said the group was really trying to force the court to make a determination about the value of the intercompany claims. He said he wouldn’t delay consideration of a proposed settlement between ResCap, its parent, Ally Financial Inc., and the unsecured creditors’ committee.
If Glenn approves the settlement, Detroit-based Ally will pay $2.1 billion to creditors in return for immunity from current and future lawsuits related to mortgage-backed securities that went bad. Glenn will consider approving the accord as part of ResCap’s reorganization plan.
Noteholders weren’t trying to disrupt the case or interfere with the settlement, their attorney Christopher Shore, a partner at White & Case LLP, said in court yesterday.
The case is In re Residential Capital LLC, 12-bk-12020, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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