Three Firms Advise on Duracell Deal: Business of LawEllen Rosen
Munger Tolles & Olson LLP represented longtime client Berkshire Hathaway Inc. in its deal to acquire the Duracell battery business from Procter & Gamble Co. Jones Day represented P&G in the stock swap as Chairman Warren Buffett narrows his company’s equity portfolio and extends a bet on operating businesses. Cadwalader, Wickersham & Taft LLP advised P&G on the tax aspects of the deal.
Berkshire will turn over $4.7 billion of P&G shares held by Buffett’s Omaha, Nebraska-based company, according to a statement yesterday. Duracell will have about $1.7 billion in cash when the deal is completed, which is expected in the second half of next year, according to the statement.
Led by Mary Ann Todd, the Munger Tolles corporate team advising Berkshire Hathaway also included partners Robert Denham and Katherine Ku, along with tax partners Stephen Rose and David B. Goldman.
The Jones Day partners representing Procter & Gamble were Bob Profusek and Peter Izanec, both mergers and acquisitions; Tricia Eschbach-Hall, benefits; Tom Briggs, intellectual property; and David Wales, antitrust.
The Cadwalader team was led by tax group chair Linda Swartz, who has served as tax counsel to P&G since 2005 on transactions including the sale of its Pringles business to Kellogg Co. and the tax-free acquisition of Gillette Co.
This is the third time in a year that Berkshire has structured a deal in which it buys businesses in exchange for stock that has appreciated. The transactions, called cash rich split-offs, avoid capital gains taxes that would otherwise be incurred if the shares were sold in the open market.
In February, Berkshire handed over a holding in Phillips 66 in exchange for its pipeline-flow-improver business. Buffett later swapped a stake in Graham Holdings Co. for cash, a Miami television station and Berkshire stock that Graham held.
Berkshire highlighted the attractive nature of the deals in its latest quarterly report to the U.S. Securities and Exchange Commission.
“Each exchange transaction was structured as a tax-free reorganization under the Internal Revenue Code,” the company said in the Nov. 7 filing. “As a result, no income taxes were provided on the excess of the fair value of the businesses received over the tax-basis cost of the common stock of Phillips 66 and Graham Holdings Company exchanged.”
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Law Firm News
Miller & Chevalier Adds Partner, Two Associates in Litigation
Kirby D. Behre has joined Miller & Chevalier Chartered as a member in the litigation department.
Behre, previously a partner at Paul, Hastings, Janofsky & Walker LLP, represents companies and individuals globally in government investigations, criminal prosecutions, complex business litigation and regulatory matters.
Joining along with Behre are associates Lauren Briggerman and Michael Anderson.
Goodwin Procter Adds IP Litigator in San Francisco Office
Shane Brun has joined Goodwin Procter LLP as a partner in its intellectual property litigation group in San Francisco.
Brun, previously a partner at K&L Gates LLP, is a U.S. Patent and Trademark Office-registered litigator with a background in industrial engineering and semiconductor manufacturing. He represents technology companies, both as plaintiffs and defendants, in patent litigation and other intellectual property and technology-related matters. His IP practice covers technologies including Internet security, computer networking and wireless communications.
Brun is the sixth partner to join Goodwin Procter’s IP litigation group in the past two months.
European Banks Face $52 Billion Legal Tab, Morgan Stanley Says
Europe’s 20 largest banks still face about $52 billion in legal costs by 2016, trailing U.S. rivals in absorbing penalties for past misconduct, Morgan Stanley analysts said.
“U.S. banks appear further along the litigation settlement process than Europeans,” the analysts led by London-based Huw Van Steenis wrote in a Nov. 12 note. The five largest U.S. banks may see a legal tab of about $18 billion after booking $128 billion in post-crisis fines and litigation costs, they said. European banks have since taken provisions and fines of $104 billion, according to the note.
Citigroup Inc. and JPMorgan Chase & Co. were the hardest hit in the first settlements since authorities began a global probe into the rigging of foreign-exchange benchmarks last year. Six firms, including UBS AG and HSBC Holdings Plc, were fined a total of $4.3 billion by regulators, with banks facing further penalties and litigation in the investigation.
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