As discussed in this space a few weeks ago, M&A activity hit a new high in the first nine months of the year. But deal value in the third quarter slid 35 percent over the second, which some see as a sign of a slowdown.
Private equity deals are also starting to show an easing in activity. According to recent figures from Preqin, there were 1,205 PE-backed buyout deals worth $93 billion in the third quarter, down from 1,274 deals valued at $129 billion in the second.
The first nine months of the year still look pretty good on the private equity front, with PitchBook reporting $508.8 billion worth of deals across 3,501 transactions, a 3.4 percent increase in value, and $280.2 billion worth of exits across 752 exits, a 4.8 percent increase in value.
Meanwhile, M&A and capital markets activity involving Texas lawyers continued at a healthy pace last week, with 18 transactions worth $18.39 billion, versus 29 deals the week before – the most so far this year – worth $3.149 billion.
Fifteen law firms in Texas and 131 Texan lawyers grabbed a piece of the action, versus 18 law firms and 104 lawyers the week before. There were 14 M&A transactions valued at $12.292 billion and four capital markets transactions worth $6.098 billion.
Among the highlights were two energy midstream simplification deals and three joint ventures (1+1=3?). The energy, transportation, consumer products, retail, industrial and technology sectors all made appearances.
M&A AND PRIVATE EQUITY INVESTMENTS
V&E, Gibson, HuntonAK, Sidley, Baker Botts work on $7.2B Antero deal
In the latest simplification transaction in the midstream industry, Antero Midstream Partners and Antero Midstream GP of Denver said Oct. 9 that they agreed to merge and convert to a corporation with an enterprise value of $7.2 billion.
The deal involves $598 million in cash, $5.3 billion in stock and $1.4 billion in debt assumption. The consideration represents a 7 percent premium for Antero Midstream Partners’ unitholders.
The combined entity will be renamed Antero Midstream Corp.
The parties expect the deal to close in the first quarter of next year if it clears unitholders and regulators.
Vinson & Elkins advised Antero Midstream GP, Antero Midstream Partners and unitholder Antero Resources on the transaction.
The team was led by partners Doug McWilliams and Lande Spottswood and senior associate Scott Rubinsky with support from associates Sean Roberts, Atma Kabad, Jane Ehinmoro, Mariam Boxwala, David Bumgardner, Jonathan Sapp and Jonathan Villa.
Specialists included V&E partners Lina Dimachkieh and Ryan Carney and associate Curt Wimberly on tax; partner Stephen Jacobson, counsel Katherine Mull and associates Austin Light and Gina Hancock on executive compensation/benefits; and partner Guy Gribov and associate Alex Kamel on finance.
Gibson Dunn & Crutcher counseled the conflicts committee of Antero Midstream Partners. The group was led by partners Gerry Spedale and Jonathan Whalen and associates Lindsay Ellis and JP Lopez. Partner James Chenoweth handled the tax aspects.
Hunton Andrews Kurth represented the conflicts committee of the board of Antero Midstream GP’s general partner. That team included Bob Jewell, Melinda Brunger, Robert McNamara and Mike Hoffman. Richards, Layton & Finger was Delaware counsel.
Sidley Austin represented the special committee of Antero Resources. The team included partners Mark Metts, George Vlahakos and Angela Richards and associates Kayleigh McNelis and Tanner Groce. Potter Anderson & Corroon was Delaware counsel.
Financial advisers included Goldman Sachs for Antero Midstream GP’s conflicts committee and Morgan Stanley for Antero Midstream Partners. Tudor, Pickering, Holt weighed in for Antero Midstream Partners’ conflicts committee while Baird did so for the special committee of Antero Resources. J.P. Morgan Securities assisted Antero Resources.
Baker Botts represented Tudor, Pickering, Holt, including partners Joshua Davidson and Clint Rancher and associate Lakshmi Ramanathan.
Antero chairman and CEO Paul Rady said in a statement that the transaction is a “win-win-win for the Antero family” and will immediately boost earnings for the new company and enhance its appeal to institutional investors.
Latham aids on $1.3B Navios Maritime merger
In another deal that takes a master limited partnership out of the market, Navios Maritime Acquisition Corp. announced Oct. 8 that it would buy all of the publicly held units of Navios Maritime Midstream Partners for around $70 million. The combined enterprise will have $1.3 billion in enterprise value.
Latham & Watkins represented the conflicts committee of Navios Maritime Midstream, including partner Ryan Maierson with associates Nick Dhesi and Blake Berkey. Partner Tim Fenn and associate Jared Grimley pitched in on tax matters.
Fried, Frank, Harris, Shriver & Jacobson represented Navios Maritime Acquisition and S. Goldman Advisors was its financial advisor. Simmons & Co. assisted Navios Maritime Midstream’s conflicts committee.
The parties expect the transaction to simplify the entities’ capital and organizational structure, boost the trading liquidity and float of Navios Acquisition’s common stock and enhance its access to the capital markets and its credit profile.
The deal also is expected to result in cash retention that will support self-funded growth, build scale through a larger asset base capable of generating increased profitability, save on public company expenses and reduce the cost of capital.
The consideration represents a 9.2 percent premium for Navios Maritime Midstream unit-holders.
The parties expect the transaction to close in December if it clears Navios Maritime Midstream unit-holders.
Navios Maritime Acquisition owns and operates tanker vessels that transport petroleum products and bulk liquid chemicals. Navios Maritime Midstream owns and operates crude oil tankers under long-term employment contracts.
V&E advises Apollo on acquisition of GE Capital’s $1B equity portfolio
Apollo Global Management agreed to acquire a $1 billion portfolio of equity investments from GE Capital, a unit of struggling conglomerate General Electric Co.
The deal includes about 20 investments in renewable energy, contracted natural gas fired generation and midstream energy infrastructure assets, mostly in the U.S.
The parties expect to close the deal in the fourth quarter. They plan to work together on future energy infrastructure investments.
Vinson & Elkins advised Apollo with a team based in New York along with counsel Damien Lyster and associate Melan Patel in Houston. Paul, Weiss, Rifkind, Wharton & Garrison and Milbank, Tweed, Hadley & McCloy also counseled Apollo.
Gibson Dunn & Crutcher and Latham & Watkins provided legal advice to GE Capital.
Bank of America Merrill Lynch and PJT Partners provided financial advice to GE Capital. Citigroup Global Markets Inc. was lead financial adviser to Apollo with RBC Capital Markets and Goldman Sachs assisting.
RBC Capital Markets, Goldman Sachs and Bank of Montreal provided Apollo with financing.
GE Capital president Alec Burger said in a statement that the sale reflects progress executing unit’s strategy and enables it to continue to deliver on its commitments and provide value to GE.
Apollo senior partner Geoffrey Strong said the transaction provides the firm with an opportunity to acquire a diversified portfolio of energy infrastructure assets with attractive risk-adjusted return profiles.
Apollo had assets under management of $270 billion as of June 30 in private equity, credit and real assets funds invested across nine industries.
Gibson Dunn represents Murphy Oil on Petrobras JV in the Gulf
Gibson Dunn & Crutcher said it represented Murphy Oil Corp. in forming a joint venture with Brazilian state-owned oil company Petrobras to own and develop assets in the Gulf of Mexico.
The Gibson Dunn team was led by corporate partner Gerry Spedale and oil and gas partner Mike Darden of Houston.
Other team members were Houston partners Shalla Prichard on finance and James Chenoweth on tax as well as Houston associates Melissa Pick (corporate), Matt Savage (oil and gas), Graham Valenta (oil and gas) and Jasper Mason (oil and gas).
Tudor, Pickering, Holt provided financial advice to Murphy, including Maynard Holt, Paul Perea, Cameron Alguire, Warren Williamson, Joe Rempe and Ryan Nguyen.
Both companies will contribute all of their producing Gulf of Mexico assets to the venture, which will be 80 percent owned by Murphy and 20 percent by Petrobras with Murphy overseeing operations.
Murphy will pay $900 million in cash to Petrobras, which could earn up to $150 million more if certain price and production thresholds are exceeded between 2019 and 2025. Murphy also will carry $50 million of Petrobras’ costs in the St. Malo field if certain enhanced oil recovery projects are undertaken.
Murphy aims to close the transaction by year-end, funding it with cash-on-hand and through its senior credit facility.
The transaction will add 41,000 barrels of oil equivalent per day of production, 97 percent of which is oil, and will increase Murphy’s oil mix by 9 percent to 61 percent.
The deal is part of a wave of oil and gas giants selling off their Gulf of Mexico fields to go after bigger, more profitable prospects. Exxon Mobil Corp. and Royal Dutch Shell plc reportedly have put billions of dollars in assets in the area on the block.
Murphy president and CEO Roger Jenkins said in a statement that the production from the joint venture will generate meaningful incremental free cash flow that provides the company with options for capital allocation.
Shearman, T&K advise EMG, Tailwater on $600M JV
Shearman & Sterling represented the Energy & Minerals Group on forming a joint venture with Dallas-based Tailwater Capital to provide $600 million for Silver Creek Midstream’s purchase and expansion of Genesis Energy’s crude gathering, storage and rail assets in the Powder River Basin.
The team included partners Omar Samji and Todd Lowther and associates Lisa Thompkins, Alix Charles, Devon Yamauchi and Doug Goldstein, all of Houston.
Jessica Hammons and Holt Foster at Thompson & Knight advised Tailwater.
Archie Fallon at Willkie Farr & Gallagher advised Silver Creek Midstream on the $300 million purchase and Patrick Hurley at Akin Gump Strauss Hauer & Feld assisted Genesis Energy.
BMO Capital Markets was Silver Creek’s financial advisor.
The purchase will give Silver Creek 190 miles of crude trunkline and gathering pipelines, 190,000 barrels per day of pipeline capacity from the Silver Creek Pronghorn terminal to the Guernsey Hub with expansion of up to 325,000 barrels per day and three key interconnections to downstream markets out of Guernsey.
The joint venture also will have 1.1 million barrels of crude storage with 800,000 barrels permitted, rail capability in and out of the terminal, batching capabilities through the system that will accommodate three types of crude oil and a transport fleet to meet service needs as the pipelines are constructed.
Silver Creek has secured long-term acreage dedications and will begin construction in the fourth quarter to expand the gathering infrastructure by 52 miles of crude pipelines and 100,000 barrels of storage.
Patrick Barley is founder and CEO of Silver Creek and Jason Downie is managing partner at Tailwater.
The private equity firm has executed 100 transactions in the upstream and midstream sectors representing $18.8 billion in transaction value. It manages $2.7 billion in committed capital, $800 million of which is available for new investments.
Baker Hughes to pay $550 Million for Adnoc Drilling stake
Houston oilfield services giant Baker Hughes, a unit of General Electric, agreed to buy a 5 percent stake in Adnoc Drilling for $550 million.
The deal values the unit of government-run Abu Dhabi National Oil Co. at $11 billion, including $1 billion in debt.
The parties’ outside counsel couldn’t be determined by press time. Baker Hughes’ chief legal officer is Will Marsh, who joined the company in 1998 after four years at Ballard Spahr. He has a law degree from Brigham Young University.
The companies said the investment is the first time that an international partner has taken a direct equity stake in an existing Adnoc services business.
Baker Hughes will provide specialized equipment and technologies to Adnoc, which is the Middle East’s largest drilling company.
Winston advises Kainos’ SlimFast sale to Glanbia for $350M
Dallas private equity firm Kainos Capital said Oct. 11 that it’s agreed to sell its portfolio company SlimFast to Glanbia plc in a transaction valued at $350 million.
The transaction also includes SlimFast’s sister company HNS. It’s expected to close by year-end.
Winston & Strawn advised SlimFast, including partner Christina Tate. Its financial advisors were Harris Williams and Sawaya Partners.
Based in Palm Beach Gardens, Florida, SlimFast provides weight management and health and wellness products. Kainos acquired SlimFast from Unilever in 2014 for undisclosed terms.
Kainos managing partner Andrew Rosen said the SlimFast acquisition didn’t come with employees or systems. But under HNS chief Chris Tisi, the company built a 60-plus person team in the U.S. and the U.K. and revitalized the “orphan brand” with redesigned packaging, relaunched advertising, clinical studies showing its effectiveness and new products.
Bob Sperry also led the investment from Kainos, which has invested $2 billion of equity in 60 transactions with a total transaction value of $10 billion.
Kirkland counsels Trafigura on $200M JV with IEnova
Kirkland & Ellis said it counseled Trafigura on a joint venture with Infraestructura Energética Nova, or IEnova, to develop a refined products terminal and storage facility in Manzanillo, Mexico.
The project’s estimated investment is around $200 million. It expects to be up and running by the end of 2020.
The Kirkland team was led by corporate partners Rhett Van Syoc, Sam Peca and Jonathan Castelan and associate Hakim Effiom-Dauw. Paul Hastings advised IEnova out of the firm’s New York office.
The transaction also includes a long-term terminal services agreement with Trafigura for 740,000 barrels of storage capacity at a marine facility in exchange for the receipt, storage and delivery of refined products in Manzanillo.
As part of the agreements, IEnova acquired 51 percent of the equity of the company whose unit owns permits and land where the project will be built. Trafigura affiliates kept 49 percent of the equity of the project.
IEnova will have control over all aspects of project implementation, including finalizing permits, securing customers for the additional capacity and completing engineering, procurement, construction, financing, operation and maintenance of the terminal.
The marine terminal will be capable of loading refined products onto rail and trucks, which will enable its customers to supply fuels to demand centers in the Manzanillo area as well as in Guadalajara, Mexico’s second largest demand center. The initial phase of the terminal is expected to have a storage capacity of 1.48 million barrels with opportunities for expansion.
The Manzanillo facility is IEnova’s sixth refined products terminal in Mexico and fits within its plan to diversify its portfolio, the company said.
Vinson & Elkins helps TCFII on $183M Core sale to Diversified
Vinson & Elkins said Oct. 11 that it counseled TCFII Gas & Oil on the sale of Core Appalachia Holding Co. to Diversified Gas & Oil plc for $183 million.
The V&E group was led by partners Chris Rowley and John Grand with associates Alex Robertson and Doug Smith.
Jim McLaughlin at Maynard Cooper in Birmingham and Wedlake Bell in London represented Diversified.
The consideration included $130 million in cash and 35 million shares of 1 pence at an effective issue price of £1.15 ($1.51) per share. The cash portion was funded through its revolver provided by KeyBank.
The buyer expects the upstream and midstream assets will immediately boost cash flow and earnings and are complementary to the ones it bought from EQT Corp. in July for $575 million.
Diversified CEO Rusty Hutson said in a statement that the acquisition will allow the company to unlock significant value from its enlarged base of assets in Kentucky and West Virginia.
Wilson Sonsini, Kastner Gravelle work on LiveOak’s Rollick investment
Rollick, an Austin affinity buying program for the powersports, RV, marine and industrial equipment industries, raised $8.3 million in Series A funding.
LiveOak Venture Partners led the round. It was joined by additional new investors Anthem Venture Partners and ManchesterStory Group and existing investors Silverton, Autotech Ventures and Capital Factory.
LiveOak founding partner Krishna Srinivasan, who previously was a partner at Austin Ventures, will join Rollick’s board.
Wilson Sonsini partner Scott Craig advised the investors while Kastner Gravelle’s Evan Kastner and Michael Vaughn assisted Rollick.
Rollick, which is led by founder Bernie Brenner, has raised almost $14 million in funding. The latest round will be used to continue its progress in the powersports and RV industry and mirror the efforts in the marine and industrial industry to offer Rollick products to dealers and manufacturers.
A portion of the investment also was used to fund the acquisition of Avala Marketing Group in late September. Avala provides digital strategies for manufacturers in the marine, RV and industrial equipment industries.
Gibson Dunn, Baker Botts aid on Forum’s Global Heat Transfer deal
Gibson, Dunn & Crutcher said it represented Forum Energy Technologies Inc. on its acquisition of Global Heat Transfer from oilfield services private equity fund Pelican Energy Partners and management for undisclosed terms.
The team included Houston corporate partner Tull Florey, Houston corporate associate Lindsay Ellis, Houston corporate associate JP Lopez and Dallas tax partner David Sinak.
The in-house Forum Energy Technologies team included VP and associate general counsel John Ivascu.
Baker Botts represented Houston-based Pelican with a group led by partner Efren Acosta. Others were Ian Jelsma and Gita Pathak (corporate), Ron Scharnberg and Katie McEvily (tax), Rob Fowler (employee benefits), Jennifer Trulock (labor and employment), Matt Kuryla (environmental), Paul Morico (intellectual property) and Chris Wilson (real estate).
Based in Houston, Global Heat Transfer designs, engineers and manufactures industrial heat exchanger and cooling systems used primarily on hydraulic fracturing equipment. Its flagship product, the Jumbotron, is a cube-style radiator that reduces customer maintenance expenses.
Forum CEO and president Prady Iyyanki said in a statement that the acquisition is part of the company’s strategy to expand its completions segment and is complementary to its portfolio of hydraulic fracturing equipment, which has a similar maintenance schedule.
Jones Day advises J.F. Lehman’s NRC Group on Quail Run purchase
Jones Day said that Dallas partner Alain Dermarkar advised J.F. Lehman & Co.-backed NRC Group on the acquisition of Quail Run Services.
Winston & Strawn partner Dick Wynne assisted Quail Run.
Quail Run provides wellsite wastewater treatment services at five disposal sites in the Eagle Ford and Permian oil and gas basins. NRC said the deal will strengthen NRC’s waste disposal offering in those areas.
Blank check company Hennessy Capital Acquisition Corp. III agreed to acquire NRC from J.F. Lehman back in June for $662 million. The deal was originally scheduled to close in the third quarter.
Kirkland represents EPIC Y-Grade on facility purchase from Southcross
Kirkland & Ellis said it represented a unit of Ares Management-backed Epic Midstream Holdings on its purchase of the Robstown NGL fractionation facility near Corpus Christi from Southcross Holdings Borrower for an undisclosed sum.
The Kirkland team was led by corporate partners John Pitts and Chad Smith, associates Ahmed Sidik and Will Mabry and debt finance partner Lucas Spivey.
The purchase, by Epic Y-Grade Holdings, also will include a 57-mile pipeline that will enable the Robstown facility to receive natural gas liquids from pipelines that allow the delivery of fractionated products to several Corpus Christi-area markets.
Epic will assume all of the NGL purchase and sale agreements associated with the fractionator, including those with Southcross Energy Partners, a Southcross Holdings affiliate. The facility has a capacity of 64,000 barrels per day with an expansion underway to 68,000.
The deal is expected to close in November.
Phillip Mezey is CEO of Epic, which was formed last year to build, own and operate midstream infrastructure in the Permian and Eagle Ford basins.
Nate Walton is partner and co-head of North American private equity at Ares Management, which had $121.4 billion in assets under management as of June 30.
HuntonAK represented Walmart on Eko joint venture
Hunton Andrews Kurth said Oct. 12 it represented Walmart on its formation of W*E Interactive Ventures, a joint venture with Eko to develop original, interactive content.
The transaction closed Sept. 20 and was announced Oct. 11.
The HuntonAK team included Courtney Cochran Butler, Mark Young, Tom Popplewell, Jonathan Reichman, Erik Kane and Erin Juvenal.
CAPITAL MARKETS ACTIVITY
Baker Botts aids CenterPoint on $5.2B in financing transactions
Baker Botts said Oct. 10 it counseled CenterPoint Energy Inc. on $5.2 billion in financing transactions to help pay for its $6 billion purchase of Vectren Corp.
The team included partners Tim Taylor and Clint Rancher along with senior associate Laura Katherine Mann and associates Jamie Yarbrough, Stephen Noh, Sunil Jamal and Hayley Hervieux, all in Houston. Partners Michael Bresson and associate Katie McEvilly assisted on tax matters.
The transactions included an $800 million underwritten public offering of 800,000 shares of perpetual preferred stock. They also involved the public offering of $1.9 billion worth of its common stock at $27.25 per share and 19.55 million depositary shares, with each representing a 1/20th interest in a share of CenterPoint’s 7 percent convertible preferred stock.
The amounts sold included $247.5 million of shares of common stock and 2.55 million depositary shares as part of the options granted to the underwriters.
On Oct. 5, CenterPoint also completed an underwritten public offering of $1.5 billion in senior notes, including $500 million of its 3.60 percent senior notes due 2021, $500 million of its 3.85 percent senior notes due 2024 and $500 million of its 4.25 percent senior notes due 2028.
Hunton Andrews Kurth attorneys outside of Texas represented the underwriters. Davis Polk & Wardwell was special counsel to the underwriters on the depositary share offering.
Gibson Dunn represents purchasers on Ascent’s $600M notes offering
Gibson Dunn & Crutcher said it represented the initial purchasers on the closing of a $600 million notes offering by Ascent Resources, which is backed by Energy & Minerals Group and First Reserve.
The deal team includes Houston partner Gerry Spedale and associates Harrison Tucker, Melissa Pick and JP Lopez. The specialists were Houston partner Shalla Prichard (finance), associate Whitney Bosworth (finance) and Houston partner James Chenoweth (tax).
Matt Pacey at Kirkland & Ellis represented Oklahoma City-based Ascent alongside associates Bryan Flannery, Caleb Lowery, Kate Cavanaugh and Andrew Allen, tax partner Mark Dundon and environmental transactions partner Paul Tanaka.
The offering consisted of 7 percent senior notes due 2026. Ascent used the proceeds to partially redeem its $525 million in outstanding 10 percent senior notes due 2022.
Ascent focuses on acquiring, exploring for, developing, producing and operating natural gas and oil properties in the Utica Shale.
HuntonAK aids Just Energy on $250M facility with Sagard
Hunton Andrews Kurth said Oct. 11 it advised Just Energy Group Inc. on its $250 million non-revolving multi-draw senior unsecured term loan facility with Sagard Credit Partners. Funds managed by an unnamed U.S.-based global fixed income asset manager also participated.
The attorneys included Phil Haines, Rich Kronthal and Tammy Brennig. The transaction closed Sept. 12.
In connection with the loan, Just Energy issued 7.46 million warrants to the lenders with each warrant being exercisable for one common share of Just Energy.
Just Energy is a Canadian-based natural gas and electricity retailer operating across North America and in the U.K., Ireland, Germany and Japan.
HuntonAK advises underwriters on $48.9M CAI offering
Hunton Andrews Kurth said Oct. 11 that it advised the underwriters on CAI International’s $48.9 million perpetual preferred stock offering.
The team included Phil Haines, Rich Kronthal, Tom Ford, Robert McNamara, Lisa Shelton, Rob Taylor, Mike Hoffman, Amanda Thienpont and Oliver Fankhauser.
The offering closed Aug. 13. The lead underwriter was RBC Capital Markets.
The offering involved 8.50 percent Series B fixed-to-floating rate cumulative redeemable perpetual preferred stock.
CAI is a San Francisco-based global transportation company offering intermodal container leasing and sales, rail leasing and operations and global logistics services.
CAPITAL MARKETS ACTIVITY
As The Texas Lawbook reported last month, Oklahoma City-based Riley Exploration Permian wants to go public. Last week it revealed a little more about the possible terms.
According to a filing with the Securities and Exchange Commission, the company aims to raise $100 million by selling almost 6.7 million shares priced between $14 to $16.
Di Santo Law is counseling the company and Goodwin Procter is representing the underwriters, which include SunTrust Robinson Humphrey and the Seaport Global Securities.
Thompson & Knight’s Joe Dannenmaier and Amy Curtis also are listed on the filing and are thought to be advising Riley backer Yorktown. The firm wouldn’t comment.
Bluescape, an investment group headed by former TXU CEO John Wilder, is another large Riley stockholder.
The company generated a $12.2 million loss on sales of $21.8 million for the 12 months ending Sept. 30. It plans to list on the NYSE as “REPX.”
As The Lawbook also previously reported, Austin-based IT management software provider SolarWinds also wants to go public.
Last week it set its IPO terms to 42 million shares at $17 to $19 per share. If the offering prices in the middle, it would raise $756 million and have a market value of $5.5 billion.
The company plans to trade on the New York Stock Exchange under the symbol “SWI.”
DLA Piper partner John J. Gilluly in Austin is advising SolarWinds. The company was taken private three years ago by Thoma Bravo Funds and Silver Lake in a $4.5 billion deal.
SolarWinds’ general counsel is Jason Bliss, who was an associate at DLA before joining SolarWinds as assistant general counsel in 2008. He earned his law degree from Duke University.
Davis Polk & Wardwell in Meno Park, Calif., is counseling the underwriters, who are led by Goldman Sachs.
SolarWinds lost $83.9 million on sales of $728 million last year and another $86.9 million on sales of $398.6 million in the first half of this year.