Observers may be pessimistic about the prospects for deal activity nationally next year, but not so in Texas.
According to a recent survey of 200 Texas business leaders by Chicago consulting firm West Monroe Partners, 81% said they are planning mergers and acquisitions within the next three years and 71% said it will happen before the end of 2020.
The firm, which has an office in Dallas, said the explosion in M&A activity is due to Texas’ prosperous economy, which is benefiting from a rapidly emerging technology scene, and the state’s business-friendly regulations.
In fact, all of the respondents said Texas has a favorable M&A climate relative to other states due to lax regulatory conditions, a strong economy and an influx of job opportunities.
Those surveyed didn’t appear to be swayed by talk of a potential downturn, seeing it as an opportunity to pick up assets. Forty-nine percent of the respondents said that a downturn would increase their efforts to acquire while 37% said it would hold them back.
Of the companies planning to make a purchase, 63% say the prospect of an economic recession is only increasing their efforts to acquire, with 77% of those doubling down saying that a potential recession is significantly driving their efforts.
Among those planning M&A activity in the near-term, 62% cited technology issues — i.e., infrastructure, cybersecurity and data breaches — as the biggest due diligence red flag, ahead of financial concerns (53%).
Of the smallest companies the firm surveyed — those with 100 to 249 employees — the largest percentage (58%) said they’re pursuing M&A activity to gain access to new technology.
In Texas last week, attorneys appeared to be racing to get deals done before the holidays. Together they booked 24 transactions worth $36.3 billion, compared with 11 deals valued at $10.4 billion the week before and 15 worth $1.8 billion at the same time last year.
Weekly Corporate Deal Tracker Roundup Stats
A compilation of weekly stats from The Lawbook's CDT Weekly Roundup
(Deal Values in Millions)
(Deal Values in Millions)
|Week Ending||Deal Count||Amount||Firms||Lawyers||M&A Count||M&A Value $M||CapM Count||CapM Value $M|
|January 22, 2022||13||$5,143.5||10||99||12||$4,842.5||1||$301|
|January 15, 2022||12||$7,605||9||155||9||$6,480||3||$1,025|
|January 8, 2022||13||$8,256.2||11||102||13||$8,256.2||0||0|
|January 1, 2022||9||$1,273.8||6||50||9||$1,273.8||0||0|
|December 25, 2021||21||$4,734.75||11||176||16||$3,410||5||$1,324.75|
|December 18, 2021||26||$7,325.2||15||193||18||$3,640.2||8||$3,685.2|
|December 11, 2021||16||$5,017||10||109||13||$1,417||3||$3,600|
|December 4, 2021||14||$2,310||8||86||8||$2,310||6||$1,882.05|
|November 27, 2021||9||$3.460.1||10||101||6||$1,758||3||$1,702.6|
|November 20, 2021||20||$22,792||15||157||12||$18,864.5||8||$3,928|
|November 13, 2021||21||$26,729||12||178||13||$11,822||8||$14,907|
|November 6, 2021||12||$8,303||13||157||10||$6,682||3||$1,621|
|October 30, 2021||21||$10,368||15||218||15||$9,24.4||6||$1,103.|
|October 23, 2021||21||$18.783.1||15||222||11||$12,314||10||$6,468.6|
|October 16, 2021||15||$3,868||11||118||15||$2,293||2||$1,575|
|October 9, 2021||20||$8,610||16||175||16||$7,795||4||$815|
|October 2, 2021||14||$6,250||11||137||10||$5,200||4||$1,050|
|September 25, 2021||11||$11,460||9||93||7||$10,200||4||$1,250|
|September 18, 2021||11||$16,603||8||99||8||$15,084||3||$1,519|
|September 11, 2021||17||$10,653||11||103||13||$8,503||4||$2,150|
|September 4, 2021||13||$7,222||10||89||11||$6,715||2||$507|
|August 28, 2021||12||$763||9||63||11||$663||1||$100|
|August 21, 2021||12||$29,659||7||79||11||$29,579||1||$80|
|August 14, 2021||22||$17,845||11||199||12||$12,805||10||$5,04|
|August 7, 2021||17||$13,670||12||139||15||$11,766||2||$1,904|
|July 31, 2021||21||$8,16||11||134||10||$3,574||10||$4,586|
|July 17, 2021||14||$4,009||11||124||12||$2,015||2||$1,994|
|July 10, 2021||16||$3,997||13||143||11||$1,597||4||$2,4|
|July 3, 2021||24||$7,492||13||94||16||$3,769||8||$3,722|
|June 26, 2021||10||$4,995||7||85||8||$3,847||2||$1,148|
|June 19, 2021||28||$16,830||8||228||9||$1,861||19||$14,968|
|June 12, 2021||26||$27,238||15||209||19||$25,602||7||$1,636|
|June 5, 2021||15||$15,539||13||100||13||$14,709||2||$600|
|May 29, 2021||35||$20,279||11||145||28||$18,64||7||$1,639|
|May 22, 2021||24||$53,208||14||174||17||$51,047||7||$2,161|
|May 15, 2021||18||$10,620||13||220||11||$5,870||7||$4,809|
|May 8, 2021||17||$10,400||11||156||15||$8,386||2||$2,500|
|May 1, 2021||21||$7,200||16||115||12||$3,808||9||$3,392|
|April 24, 2021||8||$20,200||9||3`||8||$20,200||0||0|
|April 17, 2021||14||$6,270||8||102||11||$4,0180||3||$2,260|
|April 10, 2021||15||$8,940||13||129||14||$7,990||1||$950|
|April 3, 2021||18||$19,513||10||151||12||$16,923||6||$2,590|
|March 27, 2021||27||$13,942||15||244||14||$4,300||13||$9,633.5|
|March 20, 2021||11||$2,046||4||102||3||$270||8||$1,776|
|March 13, 2021||15||$3,270||9||109||6||$538||9||$2,732|
|March 6, 2021||24||$13,617||10||196||13||$10,395||11||$3,222|
|February 27, 2021||19||$8,105||12||139||15||$4,970||4||$3,135|
|February 20, 2021||9||$8,820||9||153||8||$8,520||1||$300|
|February 13, 2021||12||$4,852.6||7||81||7||2,766||5||$2,086.6|
|February 6, 2021||18||$9,752||13||153||14||$5,222||4||$4,530|
|January 30, 2021||18||$9,449||9||182||15||$8753.8||3||$695.3|
|January 23, 2021||14||$8,150||8||118||6||$4,000||8||$4,150|
|January 16, 2021||17||$6,783||13||138||11||$2,400||6||$4,382.9|
|January 9, 2021||22||$6,829||14||135||18||$3,139.3||4||$3,690|
|January 2, 2021||7||$1,466||7||60||7||$1,466||0||0|
|December 26, 2020||18||$15,900||12||163||16||$5,300||1||$600|
|December 19, 2020||18||$9,769||14||110||14||$8,426||4||$1,343|
|December 12, 2020||10||$7,200||9||100||9||$3,325||1||$3,830|
|December 5, 2020||15||$4,261||9||122||9||$2,780||6||$1,481|
|November 28, 2020||19||$7,758||10||110||13||$4,003||6||$3,755|
|November 14, 2020||14||$864.1||14||157||12||$289.1||2||$575|
|November 7, 2020||13||$6,332||9||129||9||$2,483.5||4||$3,849|
|October 31, 2020||10||$3,995.8||8||103||6||$3,231.1||4||$754.7|
|October 24, 2020||6||$18,100||6||58||5||$17,709||1||$350|
|October 17, 2020||8||$351.9||5||55||8||$351.9||0||0|
|October 10, 2020||7||$5,229||3||50||4||$735||3||$4,494|
|October 3, 2020||14||$21,428||9||173||9||$17,535||5||$3,893|
|September 26, 2020||10||$12,770||8||93||5||$10,300||5||$2,470|
|September 19, 2020||14||$8,365||9||101||6||$1,020||8||$7,345|
|September 12, 2020||6||$4,406||8||59||3||$1,270||3||$3,136|
|September 5, 2020||11||$5,191||8||117||9||$4,061||2||$1,130|
|August 29, 2020||11||$2,531||9||94||5||$1,130||6||$1,401|
|August 22, 2020||18||$6,574||12||140||7||$1,930||11||$4,644|
|August 15, 2020||13||$4,991||10||97||7||$1,216||6||$3,775|
|August 8, 2020||12||$32,092||11||112||9||$30,457||3||$1,635|
|August 1, 2020||7||$5,287||8||76||5||$3,687||2||$1,600|
|July 25, 2020||9||$18,751||6||67||7||$18,403||2||$348|
|July 18, 2020||6||$1,982.5||5||50||4||$1,407.5||2||$575|
|July 11, 2020||11||$565.1||12||75||10||$65.1||1||$500|
|July 4, 2020||10||$8,889||8||98||9||$8,788||1||$100.3|
|June 27, 2020||8||$6,874||10||50||5||$4,972.5||3||$2,081.5|
|June 20, 2020||12||$4,444||9||115||7||$2,829||5||$1,615|
|June 13, 2020||6||$3,582||4||37||2||$350||4||$3,232|
|June 6, 2020||11||$3,213.7||8||65||7||$470||4||$2,743.7|
|May 30, 2020||8||$7,335||7||48||6||$4,639||2||$2,697|
|May 23, 2020||4||$432.4||4||34||3||$432.4||1||0|
|May 16, 2020||6||$310||6||34||5||$310||1||0|
|May 9, 2020||18||$5,630||16||124||14||$3,180||4||$2,450|
|May 2, 2020||15||10,400||10||90||8||$1,900||7||$,8,500|
|April 25, 2020||8||$3,400||9||36||5||$1,000||3||$2,450|
|April 18, 2020||19||$9,500||14||92||8||$185.7||11||$9,360|
|April 11, 2020||12||$6,000||9||40||5||$190||7||$5,800|
|April 4, 2020||14||$8,200||11||68||10||$2,200||4||$6,000|
|March 28, 2020||16||$6,500||13||96||10||$3,700||6||$2,800|
|March 21, 2020||11||$11,910||7||33||7||$2,250||4||$9,960|
|March 14, 2020||7||809.8||6||34||6||684.8||1||125|
|March 7, 2020||16||$2,500||15||70||13||$669||3||$1,400|
|February 29, 2020||13||$15,260||13||128||11||$11,760||2||$3,500|
|February 22, 2020||12||$3,700||10||92||10||$2,560||2||$1,130|
|February 15, 2020||16||$1,250||10||84||12||$35||4||$1,222|
|February 8, 2020||18||$6,080||14||123||14||$2,595||4||$3,485|
|February 1, 2020||21||$20,900||12||101||14||$17,860||7||$3,060|
|January 25, 2020||13||$7,430||13||62||12||$6,430||1||$1,000|
|January 18, 2020||23||$9,580||15||120||19||$6,580||4||$3,000|
|January 11, 2020||21||$14,200||18||199||16||$1,020||5||$13,200|
|January 4, 2020||22||$6,400||11||119||16||$3,204||6||$3,245|
|December 28, 2019||22||$7,150||19||175||18||$6,800||4||$327.4|
|December 14, 2019||24||$36,300||23||167||19||$9,500||5||$26,800|
|December 7, 2019||11||$10,400||11||55||7||$1,082||4||$9,370|
|November 30. 2019||14||$2,450||12||126||12||$1,760||2||$692.5|
|November 23, 2019||16||$1,995||10||41||11||$615||5||$1,380|
|November 16, 2019||15||$3,820||13||135||11||$2,500||4||$1,271|
|November 9, 2019||25||$12,900||17||182||23||$12,200||2||$575|
|November 2, 2019||10||$2,470||12||61||9||2,450||3||$22|
|October 26, 2019||12||$5,560||14||70||11||$3,860||1||$1,700|
|October 19, 2019||8||$6,600||8||138||8||$6,600||0||0|
|October 12, 2019||19||$4,300||14||55||16||$3,800||3||$500|
|October 5, 2019||18||$14,500||19||166||15||$11,100||3||$3,400|
|September 28, 2019||19||$8,100||18||132||18||$7,560||1||$550|
|September 21, 2019||14||$6,300||16||66||11||$2,160||3||$4,170|
|September 14, 2019||15||$23,800||12||56||11||$21,250||4||$2,570|
|September 7, 2019||17||$3,500||15||98||14||$1,900||3||$1,600|
|August 31, 2019||5||$8,700||6||50||5||$8,700||0||0|
|August 24, 2019||16||$10,000||14||82||15||$4,250||1||$5,750|
|August 16, 2019||10||$1,680||5||52||7||$650||3||$950|
|August 9, 2019||17||$17,700||15||68||14||$3,900||3||$13,800|
|August 2, 2019||13||$5,760||12||108||13||$5,760||NA||NA|
|July 27, 2019||11||$7,300||13||76||8||$6,570||3||$730|
|July 20, 2019||13||$11,800||13||125||11||$5,300||2||$6,500|
|July 13, 2019||10||$775||7||46||8||$542.5||2||$233|
|July 6, 2019||7||$2,500||9||85||7||$2,500||0||0|
|June 29, 2019||23||$8,290||15||154||17||$2,300||6||$5,970|
|June 22, 2019||17||$10,700||10||139||14||$7,700||3||$3,000|
|June 15, 2019||11||$13,500||14||160||11||$13,500||NA||NA|
|June 8, 2019||13||$2,870||17||55||11||$1,570||2||$1,300|
|June 1, 2019||10||$4,460||11||60||8||$4,140||2||$315|
|May 25, 2019||17||$4,360||14||79||14||$3,700||3||$612|
|May 18, 2019||22||$9,000||17||150||16||$3,400||6||$5,600|
|May 11, 2019||18||$19,800||17||177||15||$18,300||3||$1,500|
|May 4, 2019||10||$7,075||6||32||8||$6,900||2||$175|
|April 27, 2019||15||$3,200||14||117||14||$3,160||1||$40|
|April 20, 2019||13||$13,500||10||90||9||$12,200||4||$1,300|
|April 13, 2019||16||$38,900||14||91||14||$37,800||2||$1,100|
|April 6, 2019||12||$6,870||11||94||10||$6,730||2||$50|
|March 30, 2019||15||$6,470||12||84||10||$7,91.5||5||$5,677|
|March 23, 2019||18||$6,450||14||91||14||$5,042||4||$1,408|
|March 16, 2019||14||$10,180||12||115||11||$8,800||3||$1,300|
|March 9, 2019||9||$1,800||6||49||8||$1,300||1||$500|
|March 2, 2019||20||$3,033||16||107||14||$1,817||6||$1,262|
|February 23, 2019||12||$2,040||8||69||9||$614.6||3||$1,430|
|February 16, 2019||16||$9,970||18||77||16||$9,970||0||0|
|February 9, 2019||14||$6,400||10||110||14||$6,400||0||0|
|February 2, 2019||18||$6,740||15||99||16||$5,720||2||$950|
|January 26, 2019||13||$2,770||11||67||11||$918.95||2||$1,850|
|January 19, 2019||15||$3,819||16||76||12||$2,594||3||$1,225|
|January 12, 2019||18||$7,283||14||92||15||$1,683||3||$5,600|
|January 5, 2019||10||$529||12||50||10||$529||0||0|
|December 22, 2018||17||$2,570||13||87||14||$941||3||$1,629|
|December 15, 2018||10||$2,860||8||26||8||$264||2||$2,600|
|December 8, 2018||15||$1,819||16||65||12||$552||3||$1,267|
|December 1, 2018||12||$7,500||10||90||9||$1,200||3||$6,200|
|November 28, 2018||15||$4,500||11||107||14||$4,000||1||$500|
|November 19, 2018||18||$6,137||13||98||13||$2,142||5||$3,995|
|November 14, 2018||18||$9,200||13||152||15||$8,500||3||$694|
|November 6, 2018||16||$17,300||16||183||14||$16,361||2||$950|
|October 29, 2018||14||$14,400||18||127||17||$13,800||1||$600|
|October 24, 2018||13||$6,140||13||126||11||$5,122||2||$1,018|
|October 17, 2018||18||$18,390||15||125||14||$12,292||4||$6,098|
|October 10, 2018||29||$3,149||18||104||20||$1,647||9||$819|
|October 2, 2018||18||$9,300||11||67||14||$7,300||4||$2,000|
|September 25, 2018||13||$7,000||11||75||10||$6,000||3||$995|
|September 18, 2018||9||$3,570||7||44||9||$3,570||0||0|
|September 11, 2018||13||$5,900||10||132||13||$5,900||0||0|
|September 7, 2018||14||$5,000||15||86||11||$4,000||3||$1,000|
|August 29, 2018||15||$20,700||14||79||13||$4,700||2||$16,000|
|August 20, 2018||10||$12,400||11||53||8||$11,380||3||$1,057|
|August 14, 2018||12||$19,900||12||132||9||$18,889||3||$1,011|
|August 7, 2018||16||$68,600||11||106||13||$67,259||3||$1,340|
|July 31, 2018||15||$15,100||15||95||11||$13,060||4||$2,060|
|July 23, 2018||13||$2,130||15||60||10||$1,804||3||$1,100|
|July 17, 2018||14||$5,370||17||98||9||$4,310||5||$1,100|
|July 9, 2018||16||$11,200||15||74||10||$11,080||6||$862|
|July 3, 2018||13||$7,000||7||81||12||$6,330||1||$750|
|June 25, 2018||15||$8,800||13||97||9||$4,970||6||$3,930|
|June 18, 2018||13||$14,200||14||80||7||$221||6||$14,290|
|June 11, 2018||12||$6,300||8||96||8||$5,910||4||$803|
|June 6, 2018||13||$14,500||10||88||8||$14,154||5||$579|
|May 31, 2018||11||$4,890||10||63||8||$3,240||3||$1,790|
|May 22, 2018||15||$20,400||11||63||9||$19,808||6||$885|
|May 15, 2018||15||$4,700||15||106||10||$3,900||5||$643|
|May 9, 2018||11||$1,400||13||88||9||$1,300||2||$560|
|May 1, 2018||8||$14,250||7||88||7||$13,400||1||$450|
|April 24, 2018||12||$5,300||6||61||11||$4,470||1||$800|
|April 17, 2018||9||$1,800||10||44||7||$2,330||2||$1,434|
|April 11, 2018||11||$2,500||8||32||6||$1,690||5||$809|
|April 3, 2018||15||$13,400||11||121||9||$12,020||6||$1,090|
|March 28, 2018||10||$4,000||10||92||7||$3,870||3||$215|
|March 19, 2018||17||$5,800||13||51||10||$590||7||$5,165|
|March 12, 2018||15||$3,130||11||43||11||$2,360||4||$788|
|March 6, 2018||19||$5,400||13||116||10||$1,530||9||$4,860|
|February 27, 2018||20||$6,600||13||69||14||$5,530||6||$1,030|
|February 19, 2018||15||$5,500||14||111||10||$3,990||6||$1,980|
|February 12, 2018||23||$10,900||17||157||12||$7,110||11||$3,840|
|February 5, 2018||16||$8,600||13||100||7||$1,330||9||$7,800|
|January 30, 2018||11||$12,600||11||68||5||$7,300||6||$4,982|
|January 24, 2018||19||$9,400||15||129||5||$2,010||14||$7,337|
|January 18, 2018||10||$6,280||8||49||2||$2,100||8||$4,188|
|January 9, 2018||12||$16,500||12||92||9||$15,890||3||$475|
|January 3, 2018||10||$2,500||9||47||8||$2,350||2||$150|
|December 27, 2017||15||$9,000||15||113||9||$7,568||6||$1,784|
|December 18, 2017||15||$13,800||16||164||9||$13,010||7||$1,118|
|December 11, 2017||14||$9,700||10||126||12||$2,940||4||$8,500|
|December 4, 2017||6||$1,800||6||31||5||$1,510||1||$300|
|November 28, 2017||7||$3,850||8||76||4||$3,260||3||$285|
|November 16, 2017||10||$2,700||10||48||6||$1,840||4||$856|
|November 8, 2017||15||$2,380||17||91||10||$1,860||5||$516|
|November 1, 2017||12||$4,700||17||94||9||$3,400||4||$1,300|
|October 23, 2017||15||$10,500||10||67||10||$9,780||4||$1,530|
|October 18, 2017||6||$2,000||37||3||$225||3||$1,820|
|October 10, 2017||12||$6,570||100||9||$3,880||3||$3,360|
|October 2, 2017||8||$3,100||11||19||3||$1,630||5||$1,750|
|September 25, 2017||8||$4,880||8||79||5||$2,660||5||$2,070|
|September 18, 2017||9||$4,770||3||$300||6||$4,470|
|September 12, 2017||11||$4,430||8||$2,030||3||$2,400|
|September 1, 2017||4||$1,310||3||$317||1||$1,000|
|August 23, 2017||11||$13,640||9||8||$11,840||3||$1,800|
Twenty-three law firms and 167 Texas lawyers were involved in the activity. There were 19 M&A/private equity/venture capital deals worth $9.5 billion and five capital markets/financing transactions valued at $26.8 billion – thanks to Texas lawyers’ involvement in Saudi Aramco’s initial public offering in Riyadh.
M&A/PRIVATE EQUITY/VENTURE CAPITAL
Texas Capital, Independent go with non-Texas lawyers as primary counsel on $5.5B merger
As The Texas Lawbook reported Dec. 9, Texas Capital Bancshares and Independent Bank Group announced that they agreed to combine in an all-stock merger of equals valued at $5.5 billion, creating the largest Texas-headquartered bank by Texas deposits and the top Texas-based super regional bank.
Both banks went with lawyers outside of Texas as their main outside counsel, including Sullivan & Cromwell for Dallas-based Texas Capital and Wachtell, Lipton, Rosen & Katz for McKinney-based Independent.
Rodgin Cohen was the lead partner at Sullivan & Cromwell handling the transaction and Edward Herlihy was the lead partner from Wachtell. Both are based in New York City.
Alston & Bird said it assisted Sullivan & Cromwell as counsel for Texas Capital on the deal, including partner Sandy Brown and associate Anna Chong in Dallas.
Willkie Farr & Gallagher counseled Texas Capital CEO and president C. Keith Cargill, who will become the merged company’s special advisor on talent and client retention and strategic initiatives (partners Steve Seidman and Mark Holdsworth in New York).
Kelly Rentzel led the deal as general counsel for Texas Capital while Mark Haynie did so for Independent, where he serves as general counsel. It’s not clear who will be general counsel of the combined entity.
Jefferies and Goldman Sachs were financial advisors to Texas Capital while Stifel unit Keefe, Bruyette & Woods assisted Independent. Sandler O’Neill provided a fairness opinion to Independent’s board.
The merger has to clear regulators and both sets of shareholders but is expected to close in mid-2020.
The deal continues a consolidation wave of Texas’ banking industry, including Houston-based Prosperity Bancshares Inc.’s $2.1 billion acquisition of Dallas’ LegacyTexas Financial Group earlier in the year (Bracewell counseled Prosperity on that).
Jones Day, Locke Lord aid on Asbury Auto’s $1B purchase of Park Place Dealerships
As The Texas Lawbook also reported, Asbury Automotive Group announced Dec. 12 that it’s paying $1 billion in cash to buy Dallas-based luxury auto seller Park Place Dealerships, which is owned by Dallas founder Ken Schnitzer. The parties expect to close the transaction in the first quarter.
Locke Lord counseled Park Place, including Houston partner Kevin Peter and Houston associate Elizabeth Genter. Others on the team were Dallas partner Van Jolas, Houston partners Michael Blankenship and Ed Razim and Houston associates Jason McCloskey, Hayley McElhinney, John Niedzwiecki and Shannon Schroeder.
Locke Lord partner Steve Jacobs in Houston has done real estate work for Park Place in the past.
Hill Ward Henderson in Tampa as well as Jones Day advised Asbury, with Jones Day’s team including counsel Martha Wach in Dallas.
The investment bankers included BofA Securities for Asbury (which is providing financing for the transaction) and the Presidio Group in San Francisco for Park Place.
Schnitzer is keeping Mercedes-Benz and Porsche dealerships in Grapevine and a Grapevine body shop.
“The decision to sell the company that I have spent the past three decades building has not been an easy one,” Schnitzer said in a statement. “But now is the time to enjoy my family and friends as well as explore new opportunities.”
Park Place generates around $1.9 billion in annual revenue compared with Asbury’s $6.9 billion.
The transaction is expected to boost Asbury’s earnings next year by $1 per share to $1.25 not counting transaction costs. The buyer anticipates booking pre-tax costs associated with the purchase of around 5 cents to 10 cents per share in the fourth quarter of this year.
Duluth, Ga.-based Asbury said the deal boosts its presence in Dallas, which is considered one of the country’s most desirable luxury markets (the segment makes up 16.5% of this year’s car sales in North Texas compared with 12.7% nationally), with Texas becoming 36% of its revenue. The deal also increases the company’s overall luxury mix to 50% from 33%.
Asbury said the luxury segment has historically delivered strong and stable margins significantly above mid-line import and domestic brands. It also tends to be more resilient in downturns, have higher and more stable margins, fewer dealers nationwide and a higher portion of gross profit from parts and service.
Kirkland advises EIG on $750M investment in NextEra midstream assets
Kirkland & Ellis said Dec. 10 it advised EIG Global Energy Partners on its definitive agreements with NextEra Energy Partners to acquire $750 million in equity interests in South Texas Midstream as part of a joint venture. The transaction closed Dec. 4.
South Texas Midstream will own and operate seven natural gas transportation pipelines and related assets in Texas.
Other Kirkland Texas lawyers on the deal were debt finance partner Roald Nashi and associate Osaro Aifuwa; capital markets partner Julian Seiguer and associates Chris Fox and Logan Weissler; and environmental transactions associate Devi Chandrasekaran.
According to a filing last month with the Securities and Exchange Commission, NextEra plans to use the proceeds to repay around $623 million of existing debt of NET Midstream and its units and to fund the planned expansion of pipeline assets owned by NET Midstream units.
NextEra will receive 87.5% of STX Midstream’s cash distributions for the first four years after closing and EIG will receive 12.5%, which implies a yield to EIG of around 2.8% for the first four years.
From the third to the seventh anniversary of the closing, NextEra has the option to periodically purchase EIG’s interest in STX Midstream at a buyout price that implies a fixed pre-tax annual return of around 7.8% to EIG. If exercised, NextEra has the right to pay at least 70% of the buyout price in its common units with the balance in cash.
Depending on when or if NextEra exercises the option, EIG’s allocation of distributable cash flow from STX Midstream could increase to 75% or even 95%.
V&E, Latham work on Talos Energy’s $640M in acquisitions in Gulf of Mexico
Vinson & Elkins said last week that it advised Talos Energy Inc. on a series of definitive agreements to acquire U.S. Gulf of Mexico producing assets, exploration prospects and acreage from affiliates of ILX Holdings, Castex Energy and Venari Resources for $640 million.
Also advising were partner Ramey Layne (corporate); partners Jason McIntosh and David Peck and associate Lauren Meyers (tax); partner Sean Becker and senior associate Christie Alcalá (labor/employment); partner David D’Alessandro and associate Gina Hancock (executive compensation/benefits); partner Larry Nettles and associate Jennifer Cornejo (environmental); counsel Sarah Mitchell and senior associate Robert Stelton-Swan (insurance); and partner Guy Gribov, senior associate Jason Blackmer and associate Erin Webb (finance).
Latham & Watkins assisted ILX’s and Castex’s backer Riverstone, including partner Jeff Muñoz with associates Sean McKinley, Corey Allen, Sam Bentley and Luke Strother; Houston partner Tim Fenn with associate Jim Cole on tax matters; and Houston partner John Greer on capital markets and securities issues.
Guggenheim Securities was Talos’ financial advisor and provided a fairness opinion and JP Morgan Securities provided financial advice related to the financing and led the arrangement of increased commitments for its revolving credit facility and borrowing base. Evercore Inc. was Riverstone’s financial advisor.
Venari Resources is backed by Warburg Pincus, Kelso & Co., Temasek and the Jordan Co.
ILX and Castex expect to close the transaction in the first quarter of next year.
Talos announced the purchases Dec. 10, saying the assets produced around 19,000 barrels of oil equivalent per day during the third quarter and had proved and probable reserves of 68 million barrels of oil equivalent as of July 1, 83% of which were proved developed.
The transaction includes more than 40 identified exploration prospects over 700,000 gross acres.
Talos said the assets should generate $150 million in free cash flow this year from $210 million in adjusted EBITDA and projected capital spending of $60 million. The purchase price translates to valuation metrics of $33,684 per barrel of oil equivalent per day.
The buyer is funding the deal with $250 million in new Talos shares to be issued to sellers at closing and cash from existing sources of liquidity.
As part of its regular fall redetermination, the company’s borrowing base has been increased to $950 million from $850 million effective Dec. 10 and will be further increased to $1.15 billion at closing of the ILX and Castex acquisitions. Pro forma leverage metrics and liquidity will remain conservative, Talos said.
Talos CEO and president Timothy S. Duncan said in a statement that the acquisition significantly strengthens the company’s position as a basin-leading independent explorer and producer, providing increased scale and free cash flow, greater operational diversity and broader optionality in future growth.
“We are executing the transaction at an attractive valuation that is accretive to our shareholders and with a funding structure that preserves our strong balance sheet and liquidity,” he said. “What makes this transaction unique is the combination of high-margin production and a deep portfolio of prospects.”
Apollo Global Management and Riverstone control around 63% of Talos’ outstanding common stock.
In September, Talos sold a majority stake in one of its top Gulf prospects to British oil and gas major BP to help cut costs and help finance new acquisitions, including an additional prospect from Exxon Mobil, the Houston Chronicle reported.
Willkie advises CapStreet on raising $500M for fifth fund
The CapStreet Group, a Houston private equity firm, said Dec. 11 it raised $500 million for its fifth fund, exceeding its original target of $400 million.
Willkie Farr & Gallagher advised CapStreet, including Houston- and New York-based Bruce C. Herzog with a partner out of the firm’s New York office (Phil Isom).
CapStreet managing partner George Kelly said in the release that the firm was fortunate to expand its investor base by adding a group of new limited partners.
“CapStreet V will continue its existing strategy of recapitalizing entrepreneur and family-owned businesses where there is a defined strategy to accelerate growth through operating initiatives, technology enhancement and strategic M&A,” he said.
CapStreet invests in privately held, lower middle-market companies in the industrial and outsourced business service sectors, including tech-enabled services and software businesses. Its approach is to partner with management teams with the goal of building out corporate infrastructure, accelerating growth and profitability and creating long term sustainable businesses.
CapStreet managing partner Neil Kallmeyer said CapStreet will continue its core strategy of investing primarily in companies with $3 million to $15 million of EBITDA in its geographic region.
Since the firm’s founding in 1990, CapStreet has invested in 46 initial platform companies.
Gibson Dunn, Brandt advise on Arcosa’s $298M purchase of Cherry Industries
Gibson, Dunn & Crutcher said it advised infrastructure products and services provider Arcosa Inc. on its $298 million acquisition of Cherry Industries Inc. and affiliated entities.
The corporate team includes Dallas partners Robert Little and Jonathan Whalen and Dallas associates Paige Lager and Kiel Sauerman. It had help from lawyers in its Los Angeles office on real estate aspects (partner Douglas Champion and associate Lauren Traina).
Bradley Arant Boult Cummings advised Cherry, including partner Frederic Smith, who offices in Birmingham, Ala., and Houston.
Stephens provided financial advice to Cherry, including Nick Beare and Michael Drummond in Dallas.
Arcosa said the acquisition expands its aggregates business into the attractive Houston region, builds leadership position in growing recycled aggregates market and provides a platform for additional expansion in natural and recycled aggregates.
Cherry Industries produces natural and recycled aggregates in Houston. It generated $37 million in EBITDA on sales of $176 million for the 12 months ending Sept. 30.
Founded in 1952 and led by president Leonard Cherry, Cherry Industries has developed a platform of mines, processing facilities and services across the Houston area to offer construction materials to customers in the highway, industrial, commercial and residential markets. It also provides concrete demolition services, primarily to secure raw material for recycled aggregates.
Cherry adds 12 Houston locations to Arcosa’s 19 active aggregate and specialty materials locations in Texas, building out its footprint in a key Texas market with healthy population growth, major highway investments and positive private demand drivers.
Arcosa CEO and president Antonio Carrillo said in a statement that recycled aggregates is a growing product category due to resource scarcity and environmental, social and governance benefits, decreasing landfill use and improving air quality by reducing haul distances and energy consumption.
“Cherry is the largest recycled aggregates company in the country and we look forward to building on Cherry’s leadership position,” he said.
Arcosa plans to fund the purchase price with cash on-hand and borrowings available under its credit facility. The deal has to clear Hart-Scott-Rodino but is expected to close in the first quarter and be accretive to the company’s earnings.
Foley advises Ryman Hospitality on $275M acquisition of Austin’s Block 21
Foley said it served as lead counsel for Ryman Hospitality Properties on last week’s acquisition of mixed-use real estate development and entertainment business Block 21 in downtown Austin from Stratus Properties for $275 million.
The Texas lawyers on the team were Cliff Risman, partner and co-chair of the hospitality and leisure team in Dallas, along with corporate partner Robert Sarfatis, real estate partner Randy Jones, tax partner Steve Good, benefits partner Steve Gilles and real estate associate Jenna Alame.
The purchase price includes the assumption of $142 million in existing mortgage debt and the rest cash.
Block 21 contains the 251-room W Austin Hotel and Austin City Limits Live at the Moody Theater, a 2,750-seat entertainment venue where Austin City Limits – the longest running music series in U.S. TV history – is filmed. It also includes Class A office and retail space.
Stratus said it’s considering options for the use of the net proceeds and for its future real estate development and leasing operations. It expects to engage a financial advisor to assist in its evaluation of its options.
Status chairman, CEO and president William H. Armstrong III said in the release that Ryman Hospitality’ expertise in hospitality and live entertainment, plus its stewardship of the iconic Ryman Auditorium and Grand Ole Opry, makes it the ideal company to usher Block 21 and ACL Live into their next decade.
Ryman Hospitality chairman and CEO Colin Reed said Block 21 is an ideal addition to its existing portfolio of entertainment and hospitality assets.
The transaction is expected to close in the first quarter if it clears the loan servicer for the purchaser’s assumption of the mortgage loan and the property manager – an affiliate of Marriott – for the assumption of the hotel operating agreement. Ryman is depositing $15 million in earnest money.
Baker Botts, Kirkland aid on Jones Energy II’s sale to Revolution II for $201.5M
Oklahoma City-based Revolution II WI Holding Co., which is backed by Mountain Capital Management, agreed to buy onetime bankrupt Jones Energy II Inc. for $201.5 million in cash.
Baker Botts represented Jones, including corporate partners Mollie Duckworth in Austin and Mike Bengtson of New York and Austin along with corporate senior associate John Kaercher and corporate associates Leah Leipold and Michael Portillo.
Kirkland & Ellis aided Revolution, including corporate partners Sean Wheeler and Cephas Sekhar and associates Camille Walker, Tyler Dunphy and Ibe Alozie as well as corporate partner Chad Smith and associates Lindsey Jaquillard and Hannah Craft.
Texas specialists on the team included tax partners Mark Dundon, Stephen Butler and Will Dong; debt finance partners Andy Veit and Chad Nichols and associate Aisha Noor; and environmental transactions partner Paul Tanaka (who offices out of San Francisco and Houston) and associate Jim Dolphin.
Evercore and TD Securities provided financial advice to Jones on the sale.
Jones stockholders will receive $14.11 per share in cash for each share of Jones Energy Class A common stock or each unit of Jones Energy Holdings II they own. The parties expect to close the transaction in the first quarter.
Jones chairman Jim Addison said the board – after an exhaustive review –unanimously determined that an all-cash transaction with Revolution was in the best interests of shareholders and would provide the strongest economic value compared with the alternatives it examined.
Jones exited bankruptcy on May 17, having eliminated $1.09 billion in debt, and the company’s board set out to review strategic alternatives. It owns oil and natural gas properties in the Anadarko basin of Oklahoma and Texas while Revolution holds oil and natural gas properties in the Mid-Continent region of the U.S.
Houston-based Mountain Capital, which was founded and is led by former Apollo Global Management executive Sam Oh, has $1 billion in assets under management.
Willkie represents York Tactical Energy Fund on $125M JV with Bayswater
Bayswater Resources and Bayswater Resources Fund III and York Tactical Energy Fund and affiliate YTEF Drilling Capital said Dec. 9 they formed a joint venture to invest in an oil and gas development program in the Rockies’ DJ Basin.
Willkie Farr & Gallagher represented York Tactical led by Houston partner Michael De Voe Piazza. The rest of the team included Cody Carper, David Aaronson, Albert Jou, Ryan Cicero, Robert Jacobson and Yaniv Maman, all of Houston. Brownstein Hyatt Farber Schreck was YTEF’s Colorado regulatory counsel.
Under the terms of the agreement, YTEF has committed to fund an undivided portion of up to 63 horizontal oil and gas wells on six well pads for the development of Bayswater’s flagship Weld County, Colo., acreage position in the oil window of the DJ Basin. In exchange, YTEF will receive working interests entitling it to receive part of the revenues from the wells.
The joint wells are expected to be drilled and completed through the fourth quarter of 2020. YTEF anticipates that it will fund up to $125 million worth of capital expenditures related to the joint wells.
Drew Scoggins, managing partner of YTEF’s asset manager Millennial Energy Partners, said the partnership with Bayswater represents YTEF’s inaugural investment in the DJ Basin, which he thinks offers some of the most compelling and repeatable drilling opportunities in the U.S.
Bayswater CEO and president Steve Struna said the JV will help it efficiently maximize its capital deployment and continue to aggressively develop its core Wattenberg holdings.
Matthew Bonanno, partner and co-head of North American credit at York Capital Management, said in today’s energy market it recognizes the opportunity to provide customized financing solutions as operators look for alternative sources of capital to develop their assets.
“This investment in the DJ Basin combines YTEF’s capital markets structuring and technical strength and adds to our existing portfolio of energy investments,” he said.
Founded in 2004, Bayswater is a Denver-based oil and natural gas development company with projects principally in Colorado, Texas and Wyoming. It’s privately held and has been a principal in a series of institutional energy funds since 2010.
YTEF was formed in December of last year to pursue private middle-market opportunities in the global energy sector through a variety of investment strategies.
Founded in 1991, York Capital manages $18 billion in assets across public and private investment strategies, including its private equity platform, the York Special Opportunities Fund. It employs 60 investment professionals and 200 employees globally, primarily in New York, London and Hong Kong.
Houston-based Millennial Energy Partners is a seven-year-old firm led by Scoggins, William H. Goodwin, David Loveday and Clay Brett that manages operated, non-operated and financial assets in the oil and gas upstream and midstream sectors for York. It has financed the development of and taken direct ownership in assets in the continental U.S., Gulf of Mexico and North Sea and employs 13.
V&E advises Antero, Antero Midstream on $100M share purchase
Vinson & Elkins said it advised Denver-based Antero Midstream Corp. and Antero Resources Corp. on Antero Midstream’s agreement to repurchase $100 million of its shares owned by Antero Resources.
Partners Doug McWilliams and Scott Rubinsky led the deal team with assistance from senior associate Austin March and associate Billy Vranish. Partner Mark Brazzil and associate Megan Menniti (energy transactions/projects) also advised on the deal.
The entities also agreed to a growth incentive fee program in which Antero Midstream will reduce low pressure gathering fees for volumes gathered from Jan. 1, 2020, through Dec. 31, 2023, if it increases volumetric targets.
The parties said the incentive fee program aligns with Antero Resources’ 8% to 10% compound annual net production growth plan in 2020 and 2021.
The share repurchase and incentive fee reduction transactions were negotiated and recommended by both entities’ conflicts committees and approved by both of their boards.
Goldman Sachs and Richards, Layton, & Finger advised Antero Midstream’s committee while Baird and Potter, Anderson & Corroon did so for Antero Resources’ committee.
The parties said the deal is expected to save more than $20 million in total dividends in 2020 assuming the targeted $1.23 per share dividend and will result in a $45 million to $50 million reduction in low pressure gathering revenues next year for Antero Midstream.
Antero chairman and CEO Paul Rady said in the release that the incentive fee program supports a stronger Antero Resources with an enhanced cash flow and liquidity profile, facilitating continued development and increasing gathering, compression and processing volumes on Antero Midstream dedicated acreage.
Rady added that Antero’s 2020 budget is expecting positive free cash flow generation. Antero Midstream is targeting a 2020 capital program of $300 million to $325 million, a 22% reduction over its previous target.
Antero Midstream CFO Michael Kennedy said the fee reduction, share repurchase and capital budget update will result in a net cash flow positive impact to Antero Midstream next year of around $60 million to $65 million.
Raymond James analyst John Freeman said Antero Resources aims to sell around $875 million in assets next year, including the share sale to Antero Midstream. The assets under consideration include lease acreage, minerals, producing properties, hedge portfolio restructuring and more Antero Midstream shares.
V&E, Latham work on Devon venture with Dow to develop Stack acreage with $100M carry
Devon Energy Corp. said Dec. 10 it struck an agreement with chemical giant Dow to jointly develop part of the company’s Stack acreage in central Oklahoma.
As part of the deal, Devon will sell half of its working interest in 133 undrilled locations in exchange for a $100 million drilling carry over the next four years.
The average working interest is estimated at 60% across a mix of standard and extended-reach lateral drilling locations. Devon will serve as operator and is responsible for capital allocation and project timing.
Vinson & Elkins counseled Devon with a team led by partner Mingda Zhao with assistance from partner John B. Connally, senior associate Emery Choi and associates Michael Zarcaro, Robert Vezina and Torie Berkowitz.
Latham & Watkins represented Dow with a Houston-based corporate deal team led by partner Stephen Szalkowski with associates Greg Sorensen and Rebecca Kendall. Houston partner Tim Fenn and associate Jim Cole advised on tax matters.
The deal is considered a win-win for both sides, as Oklahoma City-based Devon is able to raise money to develop the play at a time of tight capital markets while Dow gets access to the natural gas liquids from the shale play.
Devon said the returns associated with this agreement should be enhanced by lower well costs from focused infill development drilling and midstream incentive rates that lower per-unit operating costs for each new well brought online.
“This innovative agreement is consistent with our strategy to optimize the capital efficiency and returns associated with our development programs,” Devon CEO and president Dave Hager said in a statement. “Dow is a world-class organization and this mutually beneficial agreement will help us bring forward value in the Stack while delivering carry-enhanced returns that compete effectively for capital within our portfolio.”
Devon doesn’t expect any change to its production targets or capital spending outlook next year as a result of the agreement. Devon is keeping 100% of its production and cash flow from existing operations in the Stack play.
DMC, Kastner Gravelle advise on LeanDNA’s $15M investment round
LeanDNA said it raised $15 million from S3 Ventures along with existing investors Next Coast Ventures and Rony Kahan.
The developer of artificial intelligence-based factory inventory and delivery management software plans to use the capital to scale its global offering and expand its customer base while supporting other strategic growth initiatives.
Dwyer Murphy Calvert counseled S3, including partner Billy Murphy, counsel Anna Denton and associate Audra May in Austin. Kastner Gravelle partner Evan Kastner and associate Mark Mallery assisted LeanDNA.
LeanDNA is led by CEO Richard Lebovitz, who co-founded the company four years ago after selling his previous company, Factory Logic, to SAP in 2006 for an undisclosed sum. It raised $4.5 million in Series A funding and has attracted customers such as Ibis Tek, JR Automation, Knoll, Milacron, Thales, Garrett Metal Detectors and Swenson.
LeanDNA’s competitors include Bright Machines, which raised $179 million in October, and Brain Corp, which attracted $114 million in August.
Kastner Gravelle, Egan Nelson aid on Popspots’ $5M capital raise from Silverton, others
Popspots, an Austin-based company building an operating system to improve the way brands and retailers manage and market their products in grocery stores, raised $5 million in Series A funding.
Silverton Partners led the investment round joined by Texas accelerator Capital Factory.
Kastner Gravelle partner Jerry Galvan represented Silverton while Egan Nelson partner Brian Alford counseled Popspots.
Founded in 2016, the retail tech company has 25 retail partners and is on track to be in 1,500 stores nationwide within the next year.
Popspots smart displays provide video advertising (under the trade name Grocery TV) in checkout aisles and merchandising services such as out-of-stock tracking and planogram management.
Brands and retailers use video advertising on the displays to engage customers at the checkout and lift sales on average by 13%. The displays also use integrated cameras to monitor the shelves for missing or out-of-stock items.
“Out-of-stock products cost retailers billions each year, so we created a product that not only reduces losses, but also encourages sales at the checkout,” Popspots co-founder and CEO Marlow Nickell said in a statement. “We chose that location because every customer visits the checkout and spends more time there than any other area of the store.”
The company’s other co-founders include Donald Oelke and Edward Cates. Its customers include Red Bull, Ferrara, Bashas, SpartanNash and Meredith Corp.
Roger Chen led the deal from Austin-based Silverton, which was founded in 2006 and was the initial investor for Convio, WP Engine, SailPoint and Silicon Labs, among others.
Winston represents Heartland Veterinary on its sale to Gryphon Investors
Winston & Strawn said it represented Heartland Veterinary Partners on its majority recapitalization by Gryphon Investors, which is investing and partnering alongside current shareholders of Tyree & D’Angelo Partners. Terms weren’t disclosed.
The deal team was led out of Chicago but included Dallas partner Andrew Betaque. McGuireWoods was Heartland’s regulatory advisor and Kirkland & Ellis was legal and regulatory advisor to Gryphon.
William Blair was Heartland’s financial advisor. Varagon Capital Partners was the lead financing partner for the transaction with NXT Capital and other lenders providing additional funding.
Founded in 2016 and based in Chicago, Heartland claims to be one of the fastest growing veterinary support organizations in the U.S. with 100 veterinary hospitals throughout the Mid-American and Southern markets. The company, led by CEO George Robinson, supports a network of 200 general practice veterinarians.
Luke Schroeder led the deal at San Francisco-based Gryphon, which has managed $5 billion of equity investments and capital since 1997. It targets equity investments of $100 million to $300 million in portfolio companies with sales ranging from $100 million to $500 million.
Chicago-based Tyree & D’Angelo Partners, which is led by Michael Tyree
and Enzo D’Angelo, makes control ownership investments in businesses that generate less than $50 million of annual sales and $1 million to $5 million in EBITDA. It’s completed 200 partnerships across its portfolio companies.
Varagon has made $12.4 billion in investment commitments to 150 middle market companies.
Shearman, Sidley aid on Ironwood’s deals to expand its Eagle Ford pipeline network
San Antonio pipeline operator Ironwood Midstream Energy Partners II said it closed a deal to expand its crude oil gathering network in the Eagle Ford Shale of South Texas thanks to backing from EnCap Flatrock Midstream. Terms weren’t disclosed.
The company bought 150 miles of crude oil gathering pipelines in Dimmit and La Salle counties from Houston pipeline and frac sand company Twin Eagle.
The network will support production on 124,000 acres of oil leases and connect to transmission pipelines owned by Plains All American Pipeline, NuStar Energy and EPIC Midstream that can move crude oil to Corpus Christi, Houston and other destinations along the Gulf Coast.
Shearman & Sterling counseled EnCap Flatrock Midstream with partner Sarah McLean in the lead role from the firm’s Houston office. Gibson, Dunn & Crutcher represented Ironwood II with the lead partner in Denver (Beau Stark).
Sidley Austin represented Twin Eagle with associate Atman Shukla in the lead role from the firm’s Houston office.
Ironwood II chairman, CEO and president Mike Williams said in a statement that the Gardendale system it’s acquiring is located in an area that looks to have a long life, great geologic characteristics and positive producer economics, even at current commodity price levels.
Former Twin Eagle and Anadarko Petroleum Corp. COO Danny J. Rea joined Ironwood II as its chief commercial officer and board member.
EnCap Flatrock Midstream, which was formed in 2008 by a partnership between EnCap Investments and Flatrock Energy Advisors, manages investment commitments of $9 billion. It’s currently investing out of its $3.25 billion EFM Fund IV.
Willkie advises Sterling on Bad Boy purchase
The Sterling Group announced Dec. 11 that it invested in lawn mower maker Bad Boy Inc. for undisclosed terms. The deal closed Dec. 6.
Willkie Farr & Gallagher partner Scott L. Miller in Houston counseled Sterling. Jones Day counseled Bad Boy with attorneys in New York and Cleveland (Peter Izanec and Justin Macke). Stephens was Bad Boy’s financial advisor.
Headquartered in Batesville, Ark., Bad Boy makes high-performance zero-turn riding lawn mowers that it sells through independent dealers and outdoor retailers. It’s operated as a founder-owned business since its formation in 1998 (founder Phil Pulley is staying on).
Kent Wallace led the deal from Sterling, which was founded in 1982 and targets controlling interests in basic manufacturing, distribution and industrial services companies with enterprise values ranging from $100 million to $750 million.
The firm has sponsored the buyout of 55 platform companies and several add-on acquisitions with a total transaction value of $10 billion. It currently has $2 billion in assets under management.
Porter Hedges aids LiMarCo Logistics on sale to Grammer
Porter Hedges said last week it advised LiMarCo Logistics on its sale to Stellex Capital Management-backed Grammer Industries Inc. for undisclosed terms.
The Porter Hedges team included partners Joe Morrel and Robert Reedy and associates Allison Wilbanks Pearce and Ilana Leuchtag with tax advice from partner Geoff Schultz and employee benefits advice from counsel Beverly Young.
Milbank, Tweed, Hadley & McCloy and Scopelitis, Garvin, Light, Hanson & Feary counseled Grammer on the transaction. Its financial advisors were Finnea Group and KSM Business Services Inc.
LiMarCo, based in Houston with a terminal in Corpus Christi, is a regional hauler of liquefied petroleum gas/natural gas liquids with geographic focuses in Louisiana, Oklahoma, and the Upper Texas Gulf Coast and West Texas regions. It’s co-owned by Kirby Black.
Grammer, an Indiana-based hazardous materials transportation and logistics firm, will be acquiring 26 tractors, 41 trailers and 15 independent contractors. LiMarCo’s Houston facility isn’t included in the transaction, but the Corpus Christi facility – LiMarCo’s base of operations – will provide Grammer with an office, shop and yard space for parking equipment.
“Both companies have commercial and operational synergies that make this a great fit,” Grammer CEO Bart Middleton said in a statement. “Grammer and LiMarCo share best-in-class safety and driver retention metrics, so we expect a smooth transition. This is a win-win for all involved.”
Angela Branchi, senior VP of Grammer’s NGL division, said LiMarCo is a strong geographic and commodity fit for the company’s division, allowing it to establish a brick-and-mortar presence in the busy Texas and Louisiana markets.
Stellex is a middle market private equity firm with offices in New York and London with $870 million in capital capital. It acquired Grammer last year in partnership with Great Mill Rock, the Whittington family and management. LiMarCo is Grammer’s second acquisition in the last year; it bought Sterling Transport Co. in April.
Grammer has 20 facilities located near major chemical production hubs across the U.S., including 350 tractors, 850 specialty trailers and 500 drivers and owner-operators who support 2,000 delivery points serving 500 customers.
Kelly Hart, Meadows Collier aid on Novaria’s purchase of Long-Lok
Novaria Group, a Fort Worth-based supplier of products to the aerospace and defense industries, said Dec. 12 it acquired Long-Lok, which makes self-locking and self-sealing fasteners, for an undisclosed sum.
Novaria was represented by Kelly Hart & Hallman, including associates Evan Malloy, Nathan McCune and Kayla Matus from the firm’s M&A group. Partner Tom Hegi and associate Jacob Birnbaum advised on related tax issues and partner Leslie Darby on intellectual property issues.
Meadows Collier represented Long-Lok, including senior counsel Kristen Cox and Laura Stapleton and managing partner Joel Crouch.
Led by CEO Bob Bennett, Long-Lok has locations in Cincinnati, Ohio, and Carson, Calif.
Novaria CEO Bryan Perkins said in the release that Long-Lok’s mix of products and customer relationships are a perfect fit with its portfolio of aerospace manufacturing companies.
DLA, GT counsel on Barton Creek’s investment in FlowBelow
Barton Creek Equity Partners said it invested an undisclosed sum in FlowBelow, an Austin supplier of proprietary aerodynamic technologies for Class 8 trucks.
FlowBelow founder and CEO Josh Butler and other management invested alongside Barton Creek, providing an exit for early-round investors and giving the company new capital to facilitate growth.
Focus Strategies and Maxwell Locke & Ritter provided financial and accounting advice to FlowBelow while Steer Partners advised Barton Creek and Plexus Capital provided senior debt.
Founded in 2009, FlowBelow makes wheel covers, drive wheel fairings and other products to improve aerodynamics and deliver fuel savings for trucking companies.
Michael Sayre and Ron Duncan led the deal from Barton Creek, which focuses on investments in companies in Texas, Oklahoma and Colorado that are closely held or family owned, interested in a partial or complete liquidity event and have the ability to achieve revenue and EBITDA growth by executing business improvement opportunities.
Latham, White & Case advise on Saudi Aramco’s $25.6B IPO
Saudi Arabian Oil Co., more commonly known as Saudi Aramco, raised $25.6 billion in an initial public offering in its home country – the largest ever in the world – and three Texas lawyers played a part.
White & Case advised the company, with Houston associates Cristian Blumm (in the project development and finance group) and James Langlois (in the energy, infrastructure, project finance and asset finance group) assisting in the effort.
Latham & Watkins partner Ryan Maierson in Houston was part of the team that advised the underwriters, which were led by HSBC Holdings and Saudi banks NCB Capital and Samba Capital and included Citigroup, Morgan Stanley, Credit Suisse, JP Morgan Chase and Bank of America.
The issue involved 3 billion shares, or 1.5% of the company, and the final offer price per share was $8.53, which was at the top end of the expected price range. An over-allotment option would increase the total offering size to up to $29.4 billion.
The IPO price valued Aramco at $1.7 trillion, which fell short of the Saudi royal family’s hopes for $2 trillion. But on the shares’ second trading day, the company’s value reached that $2 trillion goal.
V&E counsels Enviva Partners on $600M in private placements
Vinson & Elkins said Dec. 10 it advised Enviva Partners on a private placement of $550 million in 6.5% senior unsecured notes due 2026, which was upsized from an initial $450 million.
The firm also advised the partnership on a tack-on private placement to eligible purchasers of $50 million in 6.5% senior unsecured notes due 2026 at an offering price of 103.50% of the principal amount, which implies an effective yield to maturity of around 5.8%.
The corporate team was led by partners David Stone and Ramey Layne with assistance from senior associate Jessica Lewis and associates Maggie Webber and Carmen Guidry. Tax partner Jim Meyer and associate Dan Henderson also weighed in.
Bethesda, Md.-based Enviva plans to use the net proceeds to redeem the partnership’s $355 million worth of senior unsecured notes due 2021, including payment of the related redemption premium, and repay borrowings under its senior secured revolving credit facility.
Enviva is a publicly traded master limited partnership that turns wood fiber into wood pellets, which it sells through long-term, take-or-pay off-take contracts with customers in the U.K. and Europe.
The partnership owns and operates seven plants in the U.S. with a combined production capacity of 3.5 million metric tons of wood pellets per year. It also exports wood pellets through its marine terminals at the Port of Chesapeake in Virginia and the Port of Wilmington in North Carolina and from third-party marine terminals in Mobile, Ala., and Panama City, Fla.
Sidley represents United on participation in Avianca’s $375M financing agreement
Sidley Austin said Dec. 10 it represented United Airlines Inc. on a financing agreement with Colombian airline Avianca Holdings, Kingsland Holdings Ltd. and others worth $375 million.
Hughes Hubbard & Reed also advised United. Greenberg Traurig, Milbank and Smith Gambrell & Russell served as principal legal advisors to Avianca and Cadwalader, Wickersham & Taft counseled Kingsland.
The financial advisors included Seabury Securities and BofA Securities for Avianca, with the bank consortium including Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Chase Bank N.A and Goldman Sachs & Co. and Caoba Capital for Kingsland.
United and Kingsland funded their $250 million commitment, investing in four-year senior secured term loans with a 3% payment-in-kind annual interest rate that are convertible into Avianca common or preferred shares.
Avianca secured additional financing commitments from global investment firm Citadel and a group of Latin American private investors totaling $125 million, $75 million of which will act as a bridge to the $125 million of convertible bonds that Avianca intends to offer to its preferred shareholders during the first quarter.
Avianca’s finance team, led by CFO Adrian Neuhauser, negotiated with more than 125 creditors and suppliers over the course of the financial reprofiling process launched in late June.
In addition to securing extensions of Avianca’s bank lines and letters of credit and ensuring the exchange of 88.1% of the unsecured May 2020 bonds for secured May 2023 bonds, the reprofiling program lined up $250 million of additional cash relief from lessors, aircraft lenders and other corporate lenders, substantially strengthening its liquidity position.
Avianca CEO Anko van der Werff said in a statement that the financing marks an important turning point for the company’s plan to strengthen its financial and competitive position.
John Gebo led the deal from United while Roberto Kriete did so from Kingsland.
Sidley assists EMG on $172.5M term loan for EMG Utica
Sidley Austin said Dec. 10 that it represented the Energy & Minerals Group on a $172.5 million senior secured term loan for EMG Utica, which owns a joint venture interest in MarkWest Utica EMG, a JV between the Energy & Minerals Group and MPLX unit MarkWest Energy Partners. Credit Suisse arranged the term loan facility.
Houston energy finance partners Herschel Hamner and Robert Stephens led the team with support from associates Matthew Walker, Priscilla Arthus and Tiffany Van. Former Baker Botts partner Laura Tyson is Energy & Minerals Group’s general counsel as well as COO.
Founded in 2006, the Energy & Minerals Group focuses on investing across the global natural resource industry, including the upstream and midstream segments of the energy complex. As of Dec. 1, it had $13 billion of regulatory assets under management and had allocated $11 billion in commitments across the energy sector since inception.
V&E aids Global Medical REIT on $78M stock offering
Vinson & Elkins said Dec. 11 it advised Global Medical REIT Inc. on the pricing of an upsized underwritten public offering of 6 million shares of common stock at $13.00 per share, or $78 million.
The team was led out of Richmond, Va., but included tax associate Miron Klimkowski in Dallas.
The company granted the underwriters a 30-day option to purchase up to an additional 900,000 shares. The company plans to use the net proceeds to repay part of the outstanding indebtedness under its credit facility, to fund acquisitions and for other general corporate purposes.
Stifel, BMO Capital Markets, Baird, KeyBanc Capital Markets and SunTrust Robinson Humphrey were the joint bookrunning managers for the offering. B. Riley FBR, D.A. Davidson & Co. and Janney Montgomery Scott were passive bookrunners and Compass Point and Strategas were co-managers.
Global Medical REIT is a net-lease medical office real estate investment trust that acquires purpose-built specialized healthcare facilities and leases them to healthcare systems and physician groups.
Simmons Energy, a unit of Piper Jaffray, said it advised Lafayette, La., proppant and aggregate producer Shale Support on its Chapter 11 reorganization, including Sanjiv Shah and Rich Shinder. Simmons helped identify and analyze strategic and financial alternatives related to its capital structure and led negotiations with its creditor constituencies, which ultimately resulted in a reorganization plan being agreed upon among the parties.
Greenberg Traurig counseled Shale Support, including Houston shareholders Shari Heyen, Karl Burrer and David Eastlake. Baker Botts counseled the pre-petition senior lender and debtor-in-possession lender (New York partner Emanuel Grillo). Foley Lardner was counsel to the unsecured creditors committee, including Houston partner John Melko and Dallas partner Holland O’Neil.
Simmons said the plan significantly reduced Shale Support’s indebtedness via a debt-for-equity conversion and also incorporated an exit credit facility sufficient to fund its operations. The company filed for Chapter 11 protection in July and exited bankruptcy in mid-November.