Deal activity eased this past week, perhaps due to the up-and-down stock market, which has investors and dealmakers jittery. The start of baseball season also could be blamed (go Astros, go Rangers), although deals obviously go on, despite what’s going on at the ballpark.
Only 9 firms and 32 Texas lawyers worked on 11 deals worth $2.5 billion this past week, versus 11 firms and 121 Texas lawyers advising on 15 deals worth $13.4 billion the week before.
The big surprise was that the largest transaction of the week wasn’t in the energy industry, which dominates dealmaking in Texas, but in the food sector. Also, there was news of two initial public offerings in the works that are in satellite TV and insurance, not oil and gas.
The energy sector wasn’t entirely absent from the week’s M&A activity, however. There was a large asset sale by a debt-laden oil and gas company, an investment in a solar company, the trading of a tubular goods distributor between two Japanese giants and the sale of a liquefied natural gas import facility to a Chicago utility, among others. A few technology deals also were announced. Below are the week’s highlights.
Baker Botts advises Guenther on $1.4B sale
The billionaire Pritzker family’s PPC Partners announced April 4 that it had purchased San Antonio-based C.H. Guenther & Son, maker of Pioneer-brand gravies, seasonings and baking products and other food brands.
Terms weren’t disclosed on the deal. But the San Antonio Express-News reported that the 166-year-old company — Texas’ oldest continuously owned family business — sold for $1.4 billion, including $878.7 million in equity, citing an unnamed shareholder who voted on the sale last month.
A PPC Partners spokeswoman said she couldn’t confirm the sale price or disclose the outside legal advisers.
The Texas Lawbook sussed them out, learning that Baker Botts advised Guenther’s board and the company with a team led by partner Neel Lemon and senior associate Grant Everett, both of Dallas.
Guenther’s general counsel is Thomas “Tock” McRae, who has been in the top legal seat at the company since 2003. The Vanderbilt-trained lawyer previously practiced at Holland & Knight and Jenkins & Gilchrist in San Antonio.
Attorneys in Kirkland & Ellis’ San Francisco and Chicago offices counseled PPC Partners, which focuses on middle-market companies. The firm is led by Tony Pritzker, the Hyatt Hotels heir who Forbes estimates is worth $3.5 billion.
Guenther’s board also hired Houlihan Lokey as its financial adviser to assist with the sale. Guenther management will continue to lead the company, which will remain headquartered in San Antonio.
Guenther was founded in 1851 by German immigrant Carl Hilmar Guenther and has been continuously owned by family members since then. It employs more than 2,500 people in 19 food manufacturing locations in the U.S., Canada and Western Europe. It earned $42 million on $800 million in sales last year with customers including McDonald’s, Carl’s Jr., Hardee’s and Costco, the Express-News reported.
The company makes grain-based and seasoning products, including artisan breads, buns, rolls, biscuits, gravy mixes, frozen appetizers, spices and desserts. Besides Pioneer, its other brands include Morrison mixes, Tribeca Oven artisan breads, Sun-Bird Asian seasonings, Cuisine Adventure frozen appetizers and snack products and White Wings tortilla mixes.
Vrio files for $609M IPO
Vrio, a Latin American satellite TV service spinoff from AT&T, plans to raise $609 million in an initial public offering, according to securities filings.
Sadly, this deal appears to be a non-Texas legal affair. The company hired Sullivan & Cromwell attorneys out of Los Angeles to advise it and the underwriters are using Simpson Thacher & Bartlett out of New York. Even the Dallas-based company’s general counsel, Michael Hartman, is based in New York.
Vrio aims to sell 29.7 million shares priced between $19 to $22 per share on the New York Stock Exchange, with AT&T using the proceeds to pay down debt.
The underwriters include Goldman Sachs, J.P. Morgan, Citi, Morgan Stanley, BofA Merrill Lynch, Barclays, BTG Pactual, Credit Suisse, Deutsche Bank, Itau BBA, Santander, Banco do Brasil Securities LLC, BNP Paribas and Bradesco BBI.
SM Energy sells properties for $292.3M
Debt-laden SM Energy announced last week that it sold a big chunk of oil and gas properties in the Bakken Shale in the Rockies to unnamed buyers for $292.3 million. Closing is expected this quarter.
SM Energy didn’t use outside counsel, but its financial advisers were RBC Richardson Barr (for the Halff East assets) and Tudor, Pickering, Holt & Co. (for the Divide County properties).
SM Energy’s general counsel is David Copeland, who was the former co-founder and general counsel at Concho Resources in Midland. SM Energy associate general counsel James Lebeck previously was an associate at Vinson & Elkins in Houston and Davis Graham & Stubbs in Denver and an investment banker at Goldman Sachs.
The Halff East assets are operated by Houston-based Concho Resources, which some analysts think was the buyer.
Norton Rose Fulbright advised the buyer of the Wyoming properties, including partner Scarlet McNellie, associate Austin Hill and senior associate Jorge Gutierrez, all of Dallas. The buyer was later revealed to be Petro-Hunt out of Dallas.
Williams Capital analyst Gabriele Sorbara said the sale came in lower than his $400 million valuation. But he added that the deal unlocks value that wasn’t reflected in SM Energy’s stock, further improves its balance sheet and transitions it to a pure-play Texas oil and gas company.
Seaport Global Securities said the Divide County assets were previously marketed in January of last year before being formally withdrawn in May given “challenging macro headwinds.”
CEO and president Jay Ottoson said in a statement that the company has announced the expected divestiture of $792 million of non-core assets so far this year, which should cut debt by 30 percent.
Baker Botts advises Sunnova on $100M from Soros’ Quantum
Baker Botts said April 3 it represented Houston-based residential solar and battery storage services provider Sunnova Energy on a $100 million equity financing investment by Soros Fund Management-advised Quantum Strategic Partners.
White & Case aided Quantum on the transaction with lawyers outside of Texas (the firm recently opened an office in Houston).
The Baker Botts team was led by partners Travis Wofford and Josh Davidson and associates Sarah Dodson, Jennifer Gasser, Bill Pritchett and Mitch Athey, all of Houston.
The group had help on finance from several lawyers in the firm’s New York office; on tax from partners Mike Bresson in Houston and Jon Nelsen in Austin along with a senior associate in Palo Alto; on employee benefits from Houston partner Rob Fowler and an associate in Washington, D.C.; and on securities and shareholder litigation from Houston partner Danny David.
Baker Botts also advised Sunnova on a record-setting funding round of $615 million from Credit Suisse last year that marked the company’s first asset-backed notes securitization, with Davidson leading the team. The firm also assisted it on a $300 million equity commitment from Energy Capital Partners in 2015 with Wofford – who was then a senior associate – leading the team.
Sunnova’s general counsel is Walter “Drew” Baker, a University of Texas-trained lawyer who joined the company in January after previously serving as general counsel at Atwood Oceanics, which was purchased by Ensco last year for $839 million in stock. The company’s former general counsel was George Fibbe, who is now deputy counsel for litigation, regulation and enforcement at the U.S. Department of Energy.
Quantum focuses on long-term investments around the world. Its other investments have included Starry, SolarCity, dv01, AlphaSense, Oak Street Health, Helios Towers and Transphorm.
Goosehead Insurance files for $100M IPO
Goosehead Insurance, a Westlake-based personal lines insurance agency, filed for a $100 million initial public offering last week.
Goosehead general counsel P. Ryan Langston enlisted the help of lawyers from Davis Polk & Wardwell in New York. Attorneys in Simpson Thacher & Bartlett’s Washington, D.C. office are assisting the underwriters, which are led by JP Morgan.
Langston has been Goosehead’s top legal officer since 2014. Before that, the University of Texas law graduate was an attorney at Strasburger & Price, where he represented Goosehead and other businesses in commercial litigation and arbitration involving business dissolutions, consumer financial
disputes, theft of trade secrets, enforcement of non-competition agreements and breach of contracts.
Goosehead plans to trade on the Nasdaq under the ticker symbol GSHD. It earned $8.7 million on $42.7 million in sales last year.
Sidley, K&L Gates aid on Exelon’s LNG terminal purchase
Sidley Austin said April 2 it advised Exelon Generation, a unit of Chicago utility giant Exelon, on its purchase of the Everett liquefied natural gas import terminal in Boston from Engie North America for an undisclosed sum.
The transaction was announced March 29 and is expected to close in the fourth quarter after review by federal regulators.
The team was led by partner Brian Bradshaw and included partner David Asmus, both of Houston. The two had help from lawyers in the firm’s Washington, D.C. and Boston offices.
K&L Gates partner Randel Young advised Engie along with associate Matthew Galbraith and partner Nick Spiliotis on labor and employment, all of Houston. They had help from the firm’s Washington, D.C., Charleston, S.C., Seattle and Harrisburg, Pa., offices.
Exelon said it bought the terminal to ensure the continued reliable supply of fuel to the Mystic Units 8 and 9 power plants while they remain operating and provide LNG to gas utilities, marketers and other market participants throughout New England.
Also known as the Distrigas terminal, the Everett terminal is the longest-operating LNG import facility of its kind in the U.S. It has connections with two interstate pipeline systems and a local gas utility’s distribution system. It employs 50 people.
Mayer Brown advises RigNet, Sumitomo on acquisitions
Mayer Brown said last week it advised RigNet and Sumitomo on acquisitions.
Houston partner Robert “Bob” Gray worked on both deals: RigNet’s purchase of Brazilian oil and gas predictive analytics provider Intelie that closed March 23; and Sumitomo’s acquisition of oil country tubular goods distributor Champions Cinco Pipe & Supply from Mitsui & Co. that was announced
March 22. Both deals were for undisclosed sums.
Houston-based Rignet plans to leverage Intelie’s capabilities and market position to differentiate its managed communications services.
Champions Cinco Pipe is one of the top OCTG distributors in the U.S. with locations in Houston, San Antonio, Oklahoma, Dallas and Midland. The company has relationships with U.S. as well as foreign suppliers, which will add to Sumitomo’s steel pipe manufacturing, processing and distribution networks.
Akin, Haynes and Boone aid on Caruth’s ATA RiskStation investment
ATA RiskStation, a Dallas provider of cloud-based portfolio risk analytics for investors, said April 3 that it attracted an undisclosed investment from Caruth Capital Partners to help accelerate its expansion strategy.
Terry Schpok, a partner at Akin Gump Strauss Hauer & Feld, represented ATA RiskStation while Haynes and Boone partner Blaine Statham assisted Caruth Capital. Both are in Dallas.
ATA RiskStation was founded by technology entrepreneur Aladin Abughazaleh. The firm’s products provide an automated, structured and customizable daily risk oversight process at the individual household level for wealth managers, registered investment advisors, broker dealers, investment managers and institutional investors.
Ben deTar Wilhite, co-founder and partner at Dallas-based Caruth, said in a statement that the technology will help institutions to transition from suitability standards to the more stringent fiduciary standards while boosting revenues.
V&E advises YouEarnedIt on Vista funding
YouEarnedIt, an Austin-based employee engagement platform, said April 5 it raised an undisclosed amount of funding from Vista Equity Partners, Ridge Ventures and Silverton Partners.
Vinson & Elkins advised YouEarnedIt with a team led by partner Wes Jones and associates Luke Thomas and Jacy Selcoe, all of whom are in the firm’s Austin office.
Assisting were partner David Peck in Dallas and associate Allyson Seger in Austin (on tax); partner Shane Tucker in Dallas and associate Amy Benford in Houston (executive compensation/benefits); partner Sean Becker in Houston (labor/employment); and partner Devika Kornbacher in Houston and associate Ben Cukerbaum in Austin (intellectual property).
Kirkland & Ellis out of San Francisco counseled Vista, which is based there, as is Ridge Ventures. Silverton is headquartered in Austin.
YouEarnedIt co-founder and CEO Autumn Manning said in a statement that the investment will allow the company to accelerate growth by bringing additional expertise to its team, reinventing the next generation of products and expanding YouEarnedIt to new markets.
Founded in 2013, YouEarnedIt works with 400 large and small customers around the world to boost culture and bottom-line results through its engagement platform that delivers recognition, rewards, incentives, feedback and team insights. Since raising first round of funding in January 2017, the company claims it has more than doubled in size, overhauled its platform and delivered more comprehensive features.
Temple Turmeric uses non-Texas counsel on Dunn’s River sale
Dunn’s River Brands, a portfolio company of Fireman Capital Partners, said April 5 it acquired a majority interest in Frisco-based Temple Tumeric for an undisclosed sum.
Dunn’s River Brands co-founder Lee Brody said McDermott, Will & Emory provided it with outside legal advice while McCarter & English assisted Temple Tumeric with lawyers in the Northeast. Whipstitch Capital was Temple Turmeric’s financial adviser.
Temple Turmeric, which is led by founder and chief innovation officer Daniel Sullivan, makes and markets elixirs, wellness shots and probiotics. Dunn’s River’s brands include Sweet Leaf Tea, Tradewinds and Temple Tumeric.
Katten advises ITC on sale to Accel-KKR
Last week Accel-KKR revealed it had bought a majority stake in Carrollton-based ITC, a provider of websites, marketing, comparative rating and management software and services to the insurance industry. Terms weren’t disclosed.
Katten Muchin Rosenman advised ITC, including Dallas partner David Washburn and associate Wade Glover, while Fenwick & West assisted Accel-KKR. Morgan Partners was ITC’s financial adviser.
Scott Upfield founded ITC, also known as Insurance Technologies Corp., in 1983. It currently serves 200 insurance companies and 6,000 insurance agencies.
ITC expects the partnership with Accel-KKR will provide it with resources and capital to accelerate product innovation and expand its position. Laird Rixford, formerly president of ITC, will become the company’s CEO.