Tyco International Ltd. is again seeking to split itself in three, and Goldman, Sachs & Co. has returned to advise the conglomerate on what would be its second breakup since 2007.
Goldman's George Mattson and Matt McClure are serving as the company's financial advisers while Lazard's Bill Lewis, Mark McMaster and Jean Greene are advising Tyco's board. On Sept. 19 the company announced plans to divide its ADT North America, flow-control products, and fire and security products businesses into three publicly traded companies.
Split-ups are old hat to McClure, who advised Tyco on the June 2007 spinoffs of its Covidien plc healthcare business and its electronic components business to its shareholders through a tax-free dividend. For that deal, McClure teamed with Goldman's Frank Connor and Howard Schiller, who have both since left the firm. Goldman also provided Tyco a fairness opinion on its 2002 plan to split into four companies.
Those plans never came to fruition, but they led to Tyco's spinoff of CIT Group Inc. through a $4.6 billion initial public offering in July 2002. Goldman's Michael Esposito advised Tyco on that deal, which was managed by Goldman and Lehman Brothers Inc.
Lazard does not appear to have a pre-existing relationship with Tyco, but may have a connection through Felix Rohatyn, who last year became a special adviser to Lazard chairman and CEO Kenneth Jacobs. Rohatyn's now-defunct Rohatyn Associates LLC advised Tyco's board on its 2007 breakup, along with Evercore Partners Inc.
While Evercore is absent from the latest Tyco split-up, the firm has its hands full with similar mandates. Evercore is teaming with Goldman to advise McGraw-Hill Cos. on its plans to split its ratings and index unit from its textbook business, announced last month, and to advise Kraft Foods Inc. on the planned separation of its grocery business from its snack food unit, unveiled in August.
Another familiar face on the Tyco split-up is its counsel, Simpson Thacher & Bartlett LLP's Alan Klein. Klein led the Simpson Thacher team on Tyco's $2 billion acquisition of Brink's Home Security Holdings Inc. early last year, its first significant purchase since Edward Breen replaced Dennis Kozlowski as CEO in 2002. Klein, along with Simpson Thacher's Anthony King, reappeared to counsel Tyco in November on the sale of its electrical and metal products business, Atkore International Group Inc., to Clayton, Dubilier & Rice LLC in a deal valuing the company at about $1 billion.
If the split-up materializes, additional mandates could follow. Breen has said that the standalone companies will have "greater flexibility" to pursue acquisitions than they would under Tyco. But one banker says that the standalones could themselves be targets. "Tyco is a company where lots of people would like to buy individual businesses, but not the whole thing," the banker says. France's Schneider Electric SA, which reportedly weighed a $30 billion bid for Tyco, could resurface to pursue the fire and security business, he adds. -- Michael Rudnick
The U.K.'s BAA Airports Ltd. has enlisted a litigator in its long-running challenge to a Competition Commission divestments order dating back to March 2009. Herbert Smith LLP's Nusrat Zar has joined competition partner Stephen Wisking, who has been assisting with the legal spat from the outset. Freshfields Bruckhaus Deringer LLP competition partner David Aitman is working alongside the Herbert Smith team.
Dispute resolution specialist Zar has fought in both corporations' and public agencies' corners across a wide range of sectors. Clients have included America Online Inc. and energy regulator Office of Gas and Electricity Markets. She joined Herbert Smith in 1995 and became a partner in 2007.
Although Zar has represented BAA in smaller cases, her involvement in the action against the Competition Commission dates back to July, when the regulator reaffirmed its original ruling that BAA must trim down to four U.K. airports. Since the company sold Gatwick, to the south of London, in December 2009, only Stansted, to the north of the capital, and either Edinburgh or Glasgow in Scotland remain on the mandatory "for sale" list.
BAA lost a battle with the Competition Commission in February after a series of appeals and counterappeals, which centered on whether one of the regulator's panel members had a conflict of interest. The airports operator is now arguing that times have changed since 2009, particularly after the U.K. government blocked runway expansion at BAA's Heathrow to the west of London and elsewhere in Southeast England. BAA is pursuing a judicial review at the Competition Appeal Tribunal in a bid to hang on to Stansted, which the Competition Commission has told it to sell first.
BAA "feels it has good grounds and hasn't taken that step lightly," says Zar. "This is certainly not a delay tactic. Being forced to sell Stansted will cause considerable damage to BAA, and BAA does not think the Competition Commission should take such a drastic step without first undertaking a proper analysis based on the current circumstances."
Brick Court Chambers' Nicholas Green will represent BAA in court.
The Competition Commission has turned to Monckton Chambers for legal counsel. The regulator's in-house team includes Roland Green, Carole Begent and Angus Murray.
The Competition Appeal Tribunal sided with BAA in the first leg of its earlier challenge to the 2009 Competition Commission ruling, and it is seen as likely to make a decision in the judicial review around next spring. But since each side has demonstrated it won't give up without a fight, the case could run on far beyond that. -- Laura Board
United Technologies Corp. delivered a shot in the arm to a shaky M&A market on Sept. 21, announcing an $18.4 billion deal for Goodrich Corp. that provided a plum piece of advisory work to many of the banks that have assisted the acquisitive conglomerate over the last decade.
UTC had long been interested in buying Goodrich or a similar firm to boost its aerospace offerings, and it had worked on and off over the past year with J.P. Morgan Chase & Co. and Goldman, Sachs & Co. on various growth strategies. UTC's relationship with Goldman goes back to at least the late 1990s when the bank advised UTC on its acquisition of Sundstrand Corp. for $4.3 billion. UTC has also turned to J.P. Morgan for at least three bond offerings since 2005. A J.P. Morgan team led by Chris Gallea and including Mike Macakanja, Chris Ventresca and Dan Schafer worked on the Goodrich deal with a Goldman team led by George Mattson and including Michael Carr and David Leach.
UTC has historically spread banking fees around. It used Deutsche Bank Securities Inc. when it purchased the security arm of General Electric Co. for $1.8 billion in 2009, retained Morgan Stanley in 2008 when it made an unsuccessful $3 billion bid for Diebold Inc. and used what is now UBS Investment Bank twice in the early 2000s when spending billions to buy Kidde plc and Chubb plc. UTC revved up its internal dealmaking machine last March when it named William Brown, formerly president of UTC Fire & Security, as senior vice president of corporate strategy and development.
Goodrich, which hasn't used banks on many of its recent midmarket deals, tapped a Credit Suisse Securities (USA) LLC team including Gerry Lodge, Paul Klepetko, Craig Oxman and David DeNunzio and Citigroup Inc.'s Mark Shafir, Tom Schmidt, Joe Gaynor, Stephen Edelman and Brian Lin.
For legal advice UTC turned to longtime M&A counsel Wachtell, Lipton, Rosen & Katz. Martin Lipton and Joshua Cammaker were lead counsel on the Goodrich deal and played the same role on both the GE Security and Diebold bids. Wachtell also advised UTC on its $4.3 billion purchase of Sundstrand and the $2.3 billion sale of its automotive unit to Lear Corp. in 1999.
Cleary Gottlieb Steen & Hamilton LLP is EU competition counsel to UTC. The firm has worked for UTC for many years and provided legal advice on the company's $1.2 billion purchase of Initial Electronic Security Group from Rentokil Initial plc in 2007. It also did the antitrust work on UTC's acquisition of Chubb in 2003. Crowell & Moring LLP's Wm. Randolph Smith is U.S. antitrust counsel to UTC, which has used the firm in that role since the 1980s.
Goodrich's outside counsel was a Jones Day team that included James Dougherty, Tom Smith, Lyle Ganske and Manan Shah. Goodrich retained Jones Day with Wachtell in 2002 when it bought a TRW Inc. unit.
--Lou Whiteman and David Marcus