+(,121/,1( Citation: 19 Int'l Fin. L. Rev. 7 2000 Provided by:

Content downloaded/printed from HeinOnline Mon May 1 09:18:47 2017 -- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and Conditions of the license agreement available at http://heinonline.org/HOL/License -- The search text of this PDF is generated from uncorrected OCR text. -- To obtain permission to use this article beyond the scope of your HeinOnline license, please use: Copyright Information

Davis Polk, Simpson Thacher advise on Chase purchase of JP Morgan Two ofWall Street's oldest law firm-bank relationships look set to change, as Chase Manhattan buys JP Morgan. However, it was business as usual when the financial institutions sought external legal advice on the deal: Davis, Polk & Wardwell forJP Morgan; Simpson, Thacher & Bartlett for Chase. The stock dealjoins two ofthe biggest banks in the US - JP Morgan is the fifth largest, Chase ranks second-creating a company with over $650 billion in assets and about 100,000 employees around the world. But forJP Morgan's general counsel, RachelRobbins, completion ofthe mergerwill spell the end ofa two-decade career at the bank. According to the firms' executives, talks began in earnest only about two weeks before the intention to merge was made public. Under the deal, announced last month,JP Morgan shareholders will receive 3.7 Chase shares for each one oftheir own. The banks said the deal is valued at $207 a share, or about $33 billion. However, shares in both banks fell slightly after the move was announced. Attorneys from Simpson Thacher working on the deal included partners Richard Beattie and Lee Meyerson (corporate), Kenneth Edgar (executive compensation), and Dickson Brown (tax). Counsel was Maripat Alpuche. The Davis Polk corporate team included partners George Bason, Louis Goldberg and Randal Quarles. Partners Samuel and Kathleen Ferrell provided tax advice. Other partners working on the deal included Barbara Nims, Norajordan and Lowell Harriss, and counsel George Ince. While the names ofboth

financial institutions will be retained- the merged entity willbe calledJP Morgan Chase & Cosome analysts say Chase is already taking control. The executive committee is comprised ofeight from Chase, and five fromJP Morgan.JP Morgan chief executive Douglas Warner will become chairman, while Chase chairman William Harrison has been appointed president and chief executive. Already, approximately 50 executives have alreadybeen chosen to lead the new bank. The two companies said they expected merger-related costs to amount to about $2.8 billion, charged over 3 years, but expected to save $1.5 billion each year. One third ofthe anticipated savings will come from reduced staffing, one third from systems integration, and a further third from real estate savings. Chase said fewer than 3,000 jobs would be lost worldwide. General counsel ofthe new firm will be Chase's William McDavid, who has been with the bank since 1996. McDavid, who was previously general counsel at Chemical Banking Corporationwho bought Chase Manhattan four years ago, but opted to use the Chase name - worked at Debevoise & Plimpton before moving inhouse.

Rachel Robbins, J P Morgan Rachel Robbins,JP Morgan's top lawyer, confirmed to IFLR that she willleave once the deal is completed to pursue other opportunities. Robbins, a former associate at Milbank, Tweed, Hadley & McCloy,joinedJP Morgan in 1980. The announcement ofthe merger has scotched speculation that Deutsche Bank would submit a bid forJP Morgan, but elsewhere consolidation in the financial services industry continues at pace. Other significant deals in recent months include the $11 billion acquisition ofPaine Webber by Switzerland's UBS; Credit Suisse Group's August purchase of Donaldson, Lufkin &Jenrette for $11.5 billion; and the announcement that Citigroup was to buy the biggest consumer finance company in the US, Associates First

Cravath advises WorldCom on $6billion acquisition WorldComis acquiring Intermedia, a US broadband communications company, for $6 billion. The deal gives WorldCom a 54% controlling interest in Digex, a provider of application services for internetbased businesses. Cravath, Swaine & Moore is outside counsel to WorldCom. Cravath has represented the company in mergers and

acquisitions business since WorldCom's hostile bid for MCI in 1997. They also advise on WorldCom's debt offerings. Corporate partner Robert Townsend and tax partner Lewis Steinberglead a team of 10. Kronish Lieb Weiner & Helman is advising Intermedia. Ralph Sutcliffe is lead partner. He is assisted by tax partner Lesse Castleberry. October 2000 IInternational Financial Law Review

7

Cutting edge

Cadbury Schweppes' $1.5 billion acquisition of Snapple Beverage Group UK drinks and confectionery group Cadbury Schweppes, will pay $1.5 billion to buy Snapple Beverage Group, the US drinks company, from US company Triarc. The deal was fonnally announced on September 18 and completion is expected by November. Cadbury Schweppes was advised in-house by Bruce Futterer (seniorvice-president, legal ofDr Pepper/Seven Up) and Michael Clark (Cadbury Schweppes group company secretary). Morgan Lewis & Bockius provided outside legal advice. The key partners on the deal were: Charles Engros (business andfinance), Robert Robison

(business and finance), Steven Navarro (business and finance), Mark Gorman (business and finance, London), Richard Zarn (tax),Joseph McDonald (tax) and Gary Rothstein (employee benefits). Triarc was advisedby in-house lawyers Brian Schorr and Stuart Rosen. Outside advice came from New York law firm Paul Weiss Riflnd Wharton & Garrison. The Paul Weiss team included M&A partner Neale Albert, tax partner Alfred Youngwood and corporate finance partner Paul Ginsberg. The firm is Triarc's longstanding first choice for M&A legal advice.

The acquisition is consistent with Cadbury Schweppes's strategy to build up its position in the US soft drinks market, where its Dr Pepper/Seven Up brands and Mott's businesses are already successful. Snapple is the most successful brand in the Snapple Beverage Group (which also includes the Mistic, Stewart's and RC Cola brands) with a 28% market share ofthe premium beverages sector. In 1999 Snapple Beverage Group had revenues of$772 million with Snapple contributing about 70% ofthis total.

Remy Cointreau to acquire Bols for $446 million Linklaters is advising French wine and spirits company, Remy Cointreau, on the acquisition ofBols Royal Distilleries ofthe Netherlands. Remy Cointreau will acquire 100% ofBols Royal Distilleries for euro 510 million ($446 million), payable partly in cash and partly in Remy Cointreau shares. The combined company will have a strongerpresence worldwide, particularly in central and eastern Europe where Bols is a marketleader. The main shareholder ofBols is venture capital house, CVC Capital Partners. CVC holds 80% ofthe shares since a management buy-out

twoyearsago. CVC isbeingadvisedbyDaniel Hurstel at the Paris office ofWilkie Farr & Gallagher. Allen & Overyis advisingBols. The dealis expected to close by the end ofthe year. Gerard Taubman, general counsel at Remy Cointreau says: "It is a normal operation, there have been no real difficulties except maybe the competition aspects in some countries andin the EU. We are studying the problemin The Netherlands, Poland, Greece and maybe Germany andthe US." Linklaters and its Dutch alliance partners De Brauw Blackstone Westbroek are advisingRemy

on competition law: Olivier D'Onnesson in France and Martin Snoeps in the Netherlands. Linklaters has been working with Remy since July 1998 when it was recruited to work on a high-yieldbondissue. Patrick Rignell ofthe Paris office is leading the team, assisted by Paul Cronheirn at DeBrauw Blackstone. RobertJan Lijdsmanled the Allen & Overy team advisingBols, with assistance from competition partner Paul Glazener. Edouard Didier, managingpartner ofA&O's Paris office, advised on French law.

A&O and Linklaters advise on Europe's largest internet merger Tiscali, the Italian internet operator, is merging with World Online, the European internet service provider. The deal, worth $11 billion, is the largest in the European internet market to date. It creates the second largest internet companyinEurope. The deal provides a good example oflaw firms using the flIl scope oftheirEuropean alliances. Linklaters and its alliance firms, De Brauw Blackstone Westbroek and Gianni Origoni & Partners, advised World Online, which floated on the Amsterdam Stock Exchange in March. Jan de Boer at De Brauw says: "We really managed to work as one firm and As one team. As an international M&A lawyer this is now everyday practice. I think our clients highly value it because they can simply give me a call and I can get things done in Italy and in

Linklaters are advising on negotiations in London. Francesco Gianni and Filippo Troisi of Gianni Origoni did due diligence on the Italian company. Allen & Overyis advisingTiscali. The firm used corporate partners Alan Paul in London, Sietze Hepkema and Erik Hammerstein in Amsterdam, andRoberto Casati and Paolo Esposito ofassociated Italian firm, Brosio, Casati E Associati. Esposito explains the deal: "Although it has been presented as an integration, itis actually an acquisition ofWorld Online by means ofa capital increase ofTiscali and an offer to the

London."Jeremy Parr and Teresa Ma of

8

International Financial Law Review IOctober 2000

shareholders ofWorld Online to exchange their shares for the newly issued Tiscali shares." This isthe first time Allen &Overy has advised Tiscali. The firm was recommended by client, UBS Warburgwhichis financingthe deal. The deal was far from straightforward. Esposito says: "One ofthe issues was the threatened litigation ofWorld Online. There were rumours andpress articles that information was missing from the prospectus ofWorld Online's IPO. But the management ofTiscali has got confidence that this can be managed. I don't think the risk isparticularly high. No claim has been filedso far."

News & Deals Updates Please send all information to Ben Maiden Fax: +44 20 7779 8665 E-mail: [email protected]

Cutting edge E

Clifford Chance advises on floor plan securitization for Hyundai Clifford Chance has advised Socit G~nrale on a floorplan securitization for Hyundai Motor Finance. Hyundai was advised by Latham &Watkins. The transaction used a Cayman issuing vehicle and was a listing on the Luxembourg Stock Exchange ofUS auto loan receivablesbacked securities. It involved the issuance of $150 million Class A notes and $30 million Class B notes. Clifford Chance was chosen to advise Soci~t G~nrale partly because ofa close professional relationship between the two firms. When asked why Clifford Chance had been chosen, Lee Galloway (assistant director in the Securities Group at Soci~t6 G&6rale) pointed out that the firm: "...has representation in both markets, under both English and New York law, and expertise in

securitization" The Clifford Chance team included London partnerJohn Woodhall and New York partner Alice Yurke. The unusual nature ofthe transaction, involving the placement ofUS asset-backed notes in Europe, produced certain trustee law issues to be dealt with. According toJohn Woodhall, the protection offered to trustees in the US by the Trust Indenture Act is high and Europeantrustees tend to be muchless proactive in their deals by comparison. According to Lee Galloway, these differences were overcome by a mixture of, "legal work, compromise, education and alot oflate nights" Hyundai is a frequent issuer in the US, where the investor base is deep, but wanted to enter the European market for the first time to diversify this base.

Cravath advises on dual AXA deals New York law firm Cravath Swaine & Moore is advising AXA, the financial services group, on its offer to acquire the 39.7 % minority interest in AXA Financial for $10.4 billion. It is also advising AXA on the sale by AXA Financial ofDonaldson, Lufkin &Jenrette to Credit Suisse Group for $11.6 billion. Credit Suisse Group is represented by Shearman & Sterling. At the time ofwriting, the attempt to acquire the remaining 39.7% ofAXA Financial, not already under AXA ownership,

is still at the offer stage. The sale ofDonaldson to Credit Suisse has been signed and is awaiting shareholder approval at Credit Suisse. Working on the deals at Cravath are corporate partners George Lowy and Peter Wilson and tax partner Stephen Gordon. Richards Layton & Finger is Delaware counsel to AXA withjesse Finkelstein heading the team. AXA is represented in-house by Christianne Butte (general counsel), George Stanisfield and Antoine Larcena.

Linklaters advise on $2.2 billion Punch Group securitization The Punch Group has refinanced its UK pub estate with a 1.48 billion ($2.2 billion) assetbacked securitization.James Harbach (global securities) and Mark Burgess-Smith (real estate) at Linklaters & Alliance advised Ambac Assurance UK, guaranteeing C630 million of senior fixed and floating rate notes. Two years ago the Punch Group became one ofthe first companies in the market to use securitization as a means offinancing corporate borrowings. Harbach explains the complexity ofthe deal: "The novel thing about this was that Punch was borrowing a huge amount of money and it wanted alot offlexibility. There was a lot offixed and floating rate debt and it wanted to refinance the floating rate debt, keep

the fixed rate debt and it wanted to sell ahuge chunk ofthe managed estates. There had been no securitization deal that had managed to get everyone -investors, rating agenciescomfortable that the income profile on a managed estate was safe enough for securitization." This is the first time that monoline insurance has been used to guarantee a whole business securitization. Harbach continues: "Because of its size and the level offlexibility Punch Group wanted- the security and covenant package was very detailed. It's tight but it's also flexible." Schroder Salomon Smith Barney acted as lead manager, and was advised by Freshfields.

MTR deal stays on the rails Lawyers and bankers have dusted offtheir old Tracker Fund documents and are re-using some ofthe same tricks to sell shares in HongKong's Mass Transit Railway (MTR) this month. The incentive package is the same as the one used to sell the government's Tracker Fund last year. Local buyers get a discount and a bonus of one share for every 20 shares they hold for a year and one for every 15 shares they hold for two years. Three ofthe original Tracker firms are reunited on the deal: Freshfields, Sullivan & Cromwell and Slaughter and May. Freshfields is advising Goldman Sachs, which also underwrote the Tracker deal, while the other two firms are representing MTR. The government expects to raise HK$10.8 billion ($1.38 billion), alot lower than the original figure ofHK$15 billion which was touted by the government last year. MTR operates Hong Kong's commuter railway system and has strong fare revenue, but investors will like the stock because ofMTR's valuable property holdings along its railway lines. Robert De La Mater led the Sullivan & Cromwell team, Richard Thornhill the Slaughter and May team, and Teresa Ko the Freshfields team.

Dresdner buys Wasserstein Perella DresdnerBank isbuyingUS investment bank Wasserstein Perella for $1.6 billion. Wasserstein isawell respected M&A boutique. Dresdner says it will combine its Dresdner Kleinwort Benson investment banking division with Wasserstein under the name Dresdner Kleinwort Wasserstein. Peter Hemeing, in-house counsel at Dresdner, says: "It has taken three weeks ofvery intensive negotiations. It is avery good deal for Dresdner after our experiences with Deutsche Bank and Commerzbank earlier in the year." Dresdner has failed in merger attempts with the two German banks this year. He continues: "We are waiting for regulatory clearance from the States and we hope we can close it by the end of the year." Morris Kramer and Richard Easton lead the team at Skadden, Arps, Meagher & Flom which isadvising Dresdner in New York. Harald Voss at Freshfields Bruckhaus D eringer isadvising on Germanlaw. Wachtell, Lipton, Rosen & Katzis advising Wasserstein Perella.

October 2000 IInternational Financial Law Review

9