Skadden/DPW v. S&C: Boom Goes The Dynamite
The deal between Citigroup and Wachovia fell through, allowing Wells Buffet Fargo to swoop in and pick up the ball Citigroup dropped.
Citigroup is considering whether to increase it's bid for Wachovia or sue Wachovia according to the Wall Street Journal. They might also consider crying themselves to sleep on their huge pillow.
But legal insiders are busy blaming people for the aborted merger between the two commercial banks. The Wall Street Journal Law Blog suggests that Sullivan and Cromwell --counsel for Wachovia on both mergers-- attorneys hit the snooze button one too many times:
We lobbed a call over to Wachovia's lawyer, S&C's Rodgin Cohen, to find out. Cohen declined to comment on the record. But in looking for clues this morning, we came across this National Law Journal story entitled, "Crisis mantra for sleep-deprived M&A attorneys: don't sweat the small stuff."Discussing the feverish pace of three recent billion-dollar bank mergers, the NLJ quoted Cohen in explaining how to put such deals together so quickly: "We all understood, you can't sweat the small stuff."
The Law Blog claims that the "small stuff" might be an exclusivity agreement:
Citi claims the letter of intent it reached with Wachovia contained an exclusivity agreement prohibiting Wachovia from trying to lure other bidders. ... An M&A partner at a large New York firm who spoke with us this morning says no. "Quite often, letters of intent don't include exclusivity agreements."
Additional winners and losers after the jump.
Should the deal between Wachovia and Wells Fargo hold up, Wachtell will have even more money to throw into associate bonuses. Wachtell was the lead counsel on Wells Fargo's end of the merger.
The American Lawyer reports that DPW could be a loser if Citigroup can't acquire Wachovia:
The legal losers, should Citi miss out on the Wachovia bonanza, would be Davis, Polk & Wardwell, Citi's lead counsel in the now-aborted deal, and Skadden, Arps, Slate, Meagher & Flom, which also advised Citi, according to previous reports in The Am Law Daily.A spokesman says Davis Polk will not comment at this point on Citi's options. Eric Friedman, the soon-to-be executive partner who led the Skadden team on the Citi deal, did not return messages seeking comment.
That gentle humming you hear is an army of litigators firing up Westlaw.
Mmmmm .... recession proof industry (drool).
In Wachovia, Citi Deal, Did S&C Overlook Some 'Small Stuff'? [WSJ Law Blog]
Wells Fargo to Buy Wachovia in $15.1 Billion Deal [Dealbook]
Sullivan, Wachtell on Disputed Wachovia-Citi Deal [Law.com]
Citi's "Agreement" [Dealbreaker]
(55) Comments
It's only the pretzels that make me firsTTT.
Otherwise I would just be first.
its, not "it's"
sory
HEAD, PANTS, NOW!
"It's only..." is the correct usage - the abbreviation of "it is", the possessive form "its" would be incorrect.
Elie: Don't copy content from the WSJ Law Blog. It's unbecoming.
@2 - WHAT?!?
Holy shit 2 is retarded
"The idea he doesn't realize that Article I of the Constitution defines the role of the vice president of the United States, that's the Executive Branch. He works in the Executive Branch. He should understand that. Everyone should understand that."
The Citi deal didn't fall through - Wells just gave them a better offer.
Citigroup is considering whether to increase it's bid for Wachovia or sue Wachovia according to the Wall Street Journal.
THIS SHOULD BE "ITS"
Wah, 5 and 7.
- #2
"Its" is the possessive form of the pronoun "it" and is correctly written without an apostrophe. It should not be confused with the contraction "it's" (for "it is" or "it has"), which should always have an apostrophe.
Thank you, #12!!!
#2 / #11 - (#5 here) you're right about the mistake in the article - I misunderstood that you were referring to #1's usage of 'It's only..." -- we were all correct, just referring to different things...
Great Family Guy reference
unbelieveable 'so i married an axe murder' reference.
awesome.
2 is stupid
passes it to the man....and boom goes the dynamite
Elie:
Try not to let your desire for snarkiness get in the way of clarity. With all your precious little asides, your posts read like crap. It requires effort to cut through your shitty language to figure out what the post is actually about.
Then they took turns pissing into the bitch's ocular cavaties. THIS WAY TO THE CAFETERIA.
WHO IS DOING THEIR LITIGATION WORK?!?!?!
WLRK - Screwed up the JPM Bear Sterns deal
S&C- Screwed up this deal
Why do companies pay such high premiums for the "elite" firms when they drop the ball on the details?
Stroock is taking the lead on both sides of this case.
I thought I was going to be the first post. Looks like the first and second posts were happening at the same time and finally posted about a minute apart.
Yes, lawyers are never wrong, just give us something to argue. : ) No worries.
You should read the comments to the WSJ Law Blog article. Unlike in Elie's posts, a lot of insight there from people who aren't getting paid to write.
S&C = TTT.
Hey 21: Paul, Weiss has been owning Citi's Lit for a while now. This time, they'll get to go on offense for a change.
25 is right. This posting is full of factual errors. ATL should stick with gossip and avoid substance. Stay true to your tabloid roots.
LOL @ boom goes the dynamite
4,
Can you please tell me what the "Pentaveret" is?
um. hmm. passes to the man and
Boom goes the dynamite
http://www.youtube.com/watch?v=cyAGZ41btx8
It doesn't make sense for a publicly traded company to agree to exclusivity in a deal to be acquired, given the fiduciary duty of directors to maximize shareholder value, which usually means shopping the company around.
actually, it does.
Ok, well the Delaware Supreme Court disagrees with you:
http://www.realcorporatelawyer.com/pdfs/wlrk0403.pdf
Right, the WSJ Blog also mentions that often exclusivity agreements will not be enforced if a better deal comes along - as it clearly has here:
"Thing is, exclusivity agreements just might be considered so much “small stuff” by a Delaware court. The M&A lawyer tells us that courts are generally reluctant to negate mergers that promise big gains to stockholders. This one does: Wachovia shareholders would get a 79% premium."
Didn't anyone take corporations? Doesn't everyone read that Omnicare case??
Slight difference between an exclusivity agreement during negotiations and an acquistion agreement that does not contain a fiduciary out. My guess is Wachovia is going to try and extend omnicare to cover their actions here given the unprecednet circumstances and pace of events. If anything, Citi is only looking at damages for what they lost in fees and expenses trying to negotiate the deal.
Well, for starters WB is a North Carolina corporation, not a Delaware corporation. So the Delaware Supreme Court doesn't have anything to do with this.
38: Incorrect. Most states still look to DE for guidance. I doubt that any court case involving a NC corporation where the stakes are this high will not involve at lease some serious consideration of DE decisions. Not binding authority, but massively helpful.
#4 is perfect.
and yes, this is copied from wsj, but elie nailed this one (humor, pithy, etc.)
I thought Wachovia Bank was a national association.
Well this post is terribly written, as documented (also, Buffetts, both Warren and Jimmy, are different from buffets, which Elie appears to love).
Anyway, substance: NC looks to DE all the time - check out First Union vs. Suntrust (FU = predecessor entity to WB). NC court will likely follow Omnicare, and if the company is up for auction and they're in NC Revlon mode ("BBQ sauce as rouge" mode?), the board has to take the better deal for shareholders. Citi may avoid litigation by just making a counteroffer beating WF by a little bit, then WB is definitely in Revlon mode.
41, I though Wachovia was a national association or bank holding company as well which i believe would make it subject to federal law. But the Citi deal was only for the banking division and that may be subject to a different jx. NC or maybe even NY if the term sheet is governed by it. Any authority on what law governs, conflicts, etc.?
@43: If you're buying stock, NC. I'm not good at the bank regs, but if it's a c corp, NC controls.
MysTTTal
This piece adds nothing to the WSJ blog post other than the big pillow comment. Is there anything we can do to get Elie off this site? Her posts are either pervy stuff that has very little to do with law or law-related posts that are cribbed entirely from other blogs, etc. Given that her writing also sucks, she is pretty worthless in this role.
46 -- There is only one thing you can do: take a long break from ATL. Don't read ATL at all for six months, or at least don't read the comments. If you and everyone else does it, Elie (and maybe ATL) will be gone.
S&C = TTT
For anyone interested, here is, I think, the best and most detailed article describing the events surrounding the Wachovia-Wells Fargo deal.
http://online.wsj.com/article/SB122303190029501925.html
Enjoy!
43 - what law school did/do you go to? Every corp. is incorporated in a particular state and subject to that state's jurisdiction.
wtf does "TTT" stand for? jesus.
This post is quite misleading. It seems that DPW was actually outmaneuvered by S&C. Interesting analysis here:
http://www.clusterstock.com/2008/10/did-wachovia-s-lawyers-roll-citi-s-
@50 thanks for showing how smart you are. Read the question, it is asking if there are additional layers of jurisdiction an NA would be subject to. The fact that state of incoropration law governs for internal affairs does not mean additional laws can not affect the entity. Anyway, since you do not really know the answer but probably are in the middle of your fall term studying corporations, don't bother to respond.
And DPW is saying: I'm not leaving (yet)
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20081005&id=9229992
S&C actually got the better deal for Wachovia. The Wells offer turned out to be better. That makes S & C a better firm, not worse. Are you all jealous of S & C because you work for another firm that is ranked significantly lower, or do you work for WLRK and are afraid that S & C will take your #1 spot?