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In robust M&A markets, companies may negotiate a deal in a weekend
because of CEO optimism. But J.P. Morgan Chase & Co. assembled its
$234 million stock deal to acquire Bear Stearns Cos.
over a weekend for different reasons -- U.S. regulators were terrified
of how financial markets would have responded had Bear not agreed to a
sale.
That extreme time pressure meant that while dozens of people poured over Bear's financials, only a relative handful were involved in crafting the deal. Long conference calls were out; swift drafting and due diligence were in. J.P. Morgan CEO Jamie Dimon and his senior executives negotiated the deal themselves with no outside financial advisers, though a battalion of J.P. Morgan bankers crawled over Bear's books. Dimon did, however, have lots of legal advice. A team from Wachtell, Lipton, Rosen & Katz advised Morgan on the Bear deal. In addition to Edward Herlihy -- who has worked on each of the three deals Dimon has signed while CEO of a major bank -- corporate partners Richard Kim, Lawrence Makow and Nicholas Demmo worked on the Bear deal, along with David Neill on antitrust, Adam Shapiro on executive compensation and benefits, and restructuring and finance partner Philip Mindlin, and Jodi Schwartz and Joshua Holmes on tax. Dimon's relationship with Herlihy and Wachtell runs deep. As the CEO of Chicago's Bank One Corp. in 2004, Dimon used Wachtell in a $58 billion merger with J.P. Morgan, which turned to Lee Meyerson at longtime outside counsel Simpson Thacher & Bartlett LLP. Dimon took charge at the combined company at the end of 2005 and hired Wachtell for the $3.1 billion swap of J.P. Morgan's corporate trust unit for Bank of New York Co.'s retail and small business banking unit, a deal announced in April 2006. Wachtell also advised J.P. Morgan, Bank of America Corp. and JC Flowers & Co. LLC last year on their agreement to buy SLM Corp., which Flowers and the banks later abandoned, to some controversy. Bear turned to one banker and three law firms for advice in its fire sale. Lazard's Gary Parr advised on financial matters. On the legal side, Dennis Block, a partner at Cadwalader, Wickersham & Taft LLP, brought Bear as a client when he came from Weil, Gotshal & Manges LLP in 1998 and continued to advise the bank on a range of corporate and litigation issues. But he's not a specialist in financial institutions M&A, in which Bear never participated aggressively as a principal. So while Block led a team of lawyers that included corporate partner William Mills III, tax partner Linda Swartz and executive compensation and benefits special counsel Mark Holdsworth, Bear's senior management also tapped Peter Atkins at Skadden, Arps, Slate, Meagher & Flom LLP, along with Skadden corporate partners Fred White III and Frank Gittes and tax partners David Rievman and Edward Gonzalez, for help on the deal. Skadden has done work for Bear over the years and represented the investment bank on the $1 billion cross-investments that it and Citic Securities Co. Ltd. agreed to make in one another last fall. The bank's board also took counsel from H. Rodgin Cohen. The Sullivan & Cromwell LLP chairman has been involved in every one of the recent sovereign-wealth fund investments in U.S. commercial banks, experience Bear needed over the weekend as it dealt with U.S. regulators, prominent among them Timothy Geithner, the president of the Federal Reserve Bank of New York. Dimon is himself on the Fed's board as one of the three directors elected by member commercial banks to represent their interests. Sullivan partners Jay Clayton, Mitchell Eitel, Hydee Feldstein, David Harms and Erik Lindauer also worked on the transaction. Lazard's Parr turned to B. Robbins Kiessling, Richard Levin, Erik Tavzel and James "Jim" Woolery of Cravath, Swaine & Moore LLP as its legal counsel. Lazard general counsel Scott Hoffman joined the investment bank from Cravath in 1994. - David Marcus Related coverage:
Dealwatch: Bear Stearns - J.P. Morgan Categories Deal Video
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