Right in step with the Texas weather, dealmaking heated up last week. There were 13 transactions announced worth $14.5 billion, still 29 percent below the year’s high of $20.4 billion. The activity involved 88 Texas lawyers and 10 different firms.
Total deal values dwarfed the previous week, when there were 11 deals worth $4.89 billion involving 63 Texas lawyers and 10 law firms.
A lot of the activity was in oil and gas, of course, and there may be a lot more coming. According to a recent survey by consulting and tax firm EY, 90 percent of oil and gas executives expect the global mergers and acquisitions market to improve in the next 12 months, up from 43 percent in April 2017.
The reasons? Global economic growth, plain and simple. However, the executives cited inflation and market volatility as the biggest risks to investment plans amid rising oil prices and oilfield services looking to renegotiate at higher rates – not to mention political uncertainty and geopolitical tensions.
But Texas is no one-trick pony, and so there were also deals involving enterprise software, cybersecurity, financial services and robotics that revealed themselves this past week.
Bain-backed BMC Software sold to KKR for reported $8.3B
As reported by The Texas Lawbook last week, Bain Capital-backed BMC Software agreed May 29 to a buyout by KKR.
Deal terms weren’t disclosed, but various reports put the price tag at $8.3 billion.
Last year the Houston-based information technology software provider was said to have explored a merger with peer CA Inc. but couldn’t work out the debt financing issues. And earlier this year, BMC was thought to be considering a $10 billion initial public offering.
Bain and Golden Gate Capital took BMC private in 2013 for $6.9 billion. Other BMC owners were GIC, Insight Venture Partners and Elliott Management.
BMC hired Kirkland & Ellis as its outside legal counsel, but no one in the firm’s Houston office. Simpson Thacher & Bartlett advised KKR with lawyers out of New York.
BMC general counsel Patrick Tagtow wouldn’t comment on the deal to The Lawbook. The University of Houston-trained lawyer joined the company in 1999 from Haynes and Boone, where he practiced commercial and employment litigation after working as an associate at Johnson & Gibbs.
Goldman Sachs, Credit Suisse and Morgan Stanley provided financial advice to BMC while Macquarie Capital did so for KKR. Credit Suisse, Goldman Sachs, Jefferies, Macquarie and Mizuho Bank are providing financing for the transaction, which is expected to close in the third quarter.
Sidley advises Canada on $3.5B Kinder Morgan pipeline purchase
As previously reported by The Lawbook, the Houston office of Sidley Austin was U.S. counsel to Canada Development Investment Corp. on its May 29 acquisition of the troubled Trans Mountain pipeline system and development project from Kinder Morgan Canada Ltd. for C$4.5 billion ($3.5 billion).
Canada Development Investment is part of the Canadian government. Kinder Morgan Canada is a publicly traded affiliate of Houston pipeline giant Kinder Morgan Inc.
Energy partner David Asmus led Sidley’s deal team, which included energy partner Jim Rice. Asmus joined Sidley last year from Morgan Lewis, while Rice was part of the group that opened the Houston office in 2012 (he previously was a partner at Akin Gump Strauss Hauer & Feld).
Sidley specialists on international trade, antitrust, tax and employee benefits issues pitched in from the firm’s offices in Washington, D.C., New York and Chicago.
Borden Ladner Gervais counseled Canada Development Investment on the Canadian side. Kinder Morgan used Blake, Cassells & Graydon in Canada and Weil Gotshal & Manges in the U.S. with lawyers out of New York.
Kinder Morgan’s general counsel is J. Curtis Moffatt, who joined the company in 2014 as deputy general counsel of Kinder Morgan’s natural gas pipeline group and took the top legal job last year. The University of North Carolina-trained lawyer previously was a partner at Van Ness Feldman in Washington, D.C. and legal advisor to the chairman of the Federal Energy Regulatory Commission.
As part of the deal, the Canadian government agreed to pay for resuming the planning and construction work on the project by guaranteeing its advances under a separate federal government recourse credit facility until the transaction closes.
Kinder Morgan agreed to work with the Canadian government through July 22 to seek a third-party buyer for the pipeline and development project known as TMEP. However, the deal isn’t predicated on finding a buyer.
The transaction, which was rumored about before the announcement, is expected to close late in the third quarter or early in the fourth quarter if it clears Kinder Morgan Canada shareholders and regulators.
Kinder Morgan has worked with federal and provincial governments in Canada for around five years to bring the project into reality, but opposition in British Columbia kept it at bay.
The company said in April it had suspended non-essential activities and related spending and set May 31 as the date by which it required final clarity on the project.
Weil, T&K, Latham aid on Brazos’ $1.75B sale to Morgan Stanley Infrastructure
Weil Gotshal & Manges said May 29 it advised Old Ironsides Energy on the completed sale of Brazos Midstream’s Delaware Basin units to North Haven Infrastructure Partners II, an investment fund managed by Morgan Stanley Infrastructure, for $1.75 billion.
Weil’s Dallas-based team was led by partner Rodney Moore and included counsel Kevin Crews, associate Scott Delaney, partner Courtney Marcus on banking/finance and partner Jonathan Macke and
associate Alex Farr on tax. They were aided on antitrust and insurance matters by attorneys in the firm’s Washington, D.C. and New York offices.
Thompson & Knight advised Brazos. The team included partners Wesley P. Williams, J. Dean Hinderliter and Cole Bredthauer and associates Courtney Jamison Roane, Mickey Baden and A. Catharine Hansard.
Latham & Watkins assisted Morgan Stanley Infrastructure with a team that included partner Jeff Muñoz and partner Jesse Myers on capital markets, both of Houston. They had help from lawyers in the firm’s Washington, D.C. office on tax, employee benefits and Hart-Scott-Rodino issues and its Chicago office on environmental matters.
The transaction comes with committed debt financing of $950 million, including a $900 million term loan and a $50 million revolver. They were underwritten and arranged by Jefferies, Brazos’ financial advisor, the Royal Bank of Canada, Morgan Stanley’s advisor.
Fort Worth-based Brazos now operates as a North Haven portfolio company but management is staying on.
The recapitalization will be used to support Brazos’ growth strategies in West Texas’ and New Mexico’s Delaware Basin, including the build-out of its third cryogenic natural gas processing plant that’s expected to be operating by year-end. The expansion will bring Brazos’ total operated processing capacity to about 460 million cubic feet per day.
Kirkland, Baker Botts counsel on $404M Haymaker sale to Kimbell Royalty
Kirkland & Ellis said its Houston office advised Haymaker Resources and its backer KKR on an agreement to sell its mineral and royalty interests to Kimbell Royalty Partners for $404 million in cash and units.
The sale, which was announced May 29, includes assets owned by Haymaker Minerals and Royalties, which is owned by Haymaker and Kayne Anderson Capital Advisors.
The Kirkland team was led by corporate partners John Pitts, David Castro and Cy Jones and associates Leon Johnson and Rob Goodin; debt finance partner Lucas Spivey; and capital markets partner Matt Pacey and associate Ryan Guerrero.
Baker Botts represented Kimbell Royalty with a group in Houston that included partners Jason Rocha, Clint Rancher, Rachael Lichman, Joshua Davidson and Mike Bresson. Others were senior associates Eileen Boyce and Laura Katherine Mann and associates Chad Davis, Jennifer Gasser, Kate McEvilly, Sunil Jamal and Steven Lackey.
DLA Piper counseled Kayne Anderson, including Houston partner Jack Langlois, who is U.S. co-chair of the firm’s energy sector, along with partners Gislar Donnenberg and Glenn Reitman of Houston, Dallas associate Todd Mobley and Houston associates Jibin Luke, Ansley Newton and Courtney Wade. The team had assistance from attorneys in the firm’s New York and Boston offices.
Kayne Anderson general counsel Kevin Brophy in Houston – a onetime associate at Akin Gump and Chamberlain Hrdlicka – also worked on the transaction.
Haymaker’s general counsel is Vasilis Mouratoff, who also co-founded the company and serves as CFO.
Credit Suisse was exclusive financial advisor and sole placement agent on the Series A Preferred Units to Kimbell while UBS was exclusive capital markets advisor to Kimbell in connection with the election to change to a taxable entity. RBC Richardson Barr acted as exclusive financial advisor to Haymaker.
Haymaker owns mineral and royalty interests in the U.S. Kimbell Royalty owns oil and gas mineral and royalty interests across 20 states.
The purchase price is made up of $210 million in cash and 10 million common units of Kimbell valued at around $194 million.
Kimbell will raise the cash portion of the purchase price through a private placement of 7 percent Series A Cumulative Convertible Prefered Units to Apollo Global Management for gross process of $110 million. It also will tap $114 million under a new $200 million revolving credit facility. Kirkland advised Apollo on the placement as well.
Raymond James analyst James Freeman said Kimbell’s outlook is much improved given the “transformational” acquisition and its move to become a C-Corp.
V&E advises SailPoint on upsized $400M follow-on offering
Vinson & Elkins said May 30 it advised Austin-based SailPoint Technologies on its upsized follow-on offering of 17.8 million shares at $22.50 per share, raising $400 million for backer Thoma Bravo. The issue closed May 29.
The corporate team was led by counsel Lanchi Huynh in Dallas and partners Wes Jones and Paul Tobias in Austin with assistance from associates Ryan Clyde and Mike Andrews in Dallas.
Also advising were partner Shane Tucker on executive compensation/benefits and partner David Peck and associate Lauren Meyers on tax, all of Dallas.
SailPoint’s general counsel is Chris Schmitt, who joined the company last year after spending 10 years at Vinson & Elkins, seven years as a partner in Dallas. He received his law degree from the University of Michigan.
Kirkland & Ellis out of Chicago advised Chicago-based Thoma Bravo and Goodwin Proctor lawyers in Boston represented the underwriters, which included Morgan Stanley, Goldman Sachs, Citigroup, Jefferies and RBC Capital Markets.
SailPoint said in November that it planned to offer 20 million shares at between $9 to $11 per share with the hope of raising $190 million. The offering then was changed to 15 million shares and then upsized to 17.8 million shares with a 30-day option for 2.67 million additional shares.
Thoma Bravo invested an undisclosed sum in SailPoint back in 2014.
SailPoint provides cybersecurity solutions to customers around the world, which it claims includes seven of the top 15 banks, four of the top six healthcare insurance and managed care providers, nine of the top 15 property and casualty insurance providers, five of the top 15 pharmaceutical companies and 11 of the largest 15 federal agencies.
Baker Botts advising Carbon Natural Gas on $75M IPO
Baker Botts is advising private equity-backed Carbon Natural Gas on a possible $75 million initial public offering.
Partners Josh Davidson and Jim Marshall in Houston are leading the deal team. Vinson & Elkins is assisting the underwriters with a partner in its New York office.
The Denver-based oil and natural gas producer is backed by Yorktown Energy Partners, which owns 64.5 percent; Arbiter Capital Management, which holds 8.5 percent; and AWM Investment, which has 9.2 percent.
Carbon Natural Gas’ properties are in the Appalachian Basin in Kentucky, Ohio, Tennessee, Virginia and West Virginia; the Ventura Basin in California; and the Illinois Basin in Illinois and Indiana.
The company is led by Patrick McDonald, the former CEO of Forest Oil, which combined with Sabine Oil in 2014. It earned $6.5 million on sales of $117.4 million last year.
Sidley advises Morgan Stanley Energy on Presidio investment
Sidley Austin said June 1 it advised Morgan Stanley Energy Partners on its majority equity investment in Fort Worth-based Presidio Petroleum for undisclosed terms.
The investment will facilitate Presidio’s acquisition of upstream oil and gas assets in Texas and Oklahoma from Midstates Petroleum for $58 million.
The Sidley team was led by energy partner Cliff W. Vrielink and included global finance counsel Daniel F. Allison, private equity associate Chris Folmsbee, M&A associate Alexander H. Tanton and counsel Zackary Pullin on tax. All are in Houston.
Tulsa-based Midstates did a lot of the work inhouse but also used Kirkland & Ellis associate Chad Nichols in Houston, a source said.
Robert Lee and John Moon led the deal from Morgan Stanley Energy Partners, a unit of investment bank Morgan Stanley.
Presidio was founded by Chris Hammack and Will Ulrich to acquire and operate oil and gas properties in established onshore basins in the U.S.
Hammack previously was president and CEO of KKR- and Riverstone-backed Trinity River Energy, whose Barnett Shale assets were purchased by Starwood Capital-backed EagleRidge Energy in June of last year. Ulrich previously was chief of corporate development at Atlas Energy and an investment banker at UBS.
Bracewell assists Barclays on Green Bancorp’s $45.6M stock offering
Bracewell said May 29 it represented Barclays as the underwriter in Green Bancorp’s secondary stock offering worth $45.6 million.
The team included partner Will Anderson, counsel Ian R. Brown and associate Tyler C. Lohse with help from one of the firm’s partners in New York.
Skadden Arps Slate Meagher & Flom represented Green Bancorp out of New York.
The offering involved 2 million shares of stock at $22.80 per share. The selling shareholders were units of Friedman Fleischer & Lowe Capital and Harvest Partners, which each sold 1 million shares, reducing their stakes in the company to around 8.06 percent from a previous 10.7 percent.
Bracewell assists Alinda on sale of NorTexas to Castleton
Bracewell worked on another deal this past week, saying May 29 that it advised Alinda Capital Partners on the sale of NorTexas Midstream Partners to a unit of Castleton Commodities International for an undisclosed sum.
The Texas lawyers involved were partners Alan Rafte, Bruce Jocz, Rebecca Baker, Aaron Roffwarg and Matt Paulson, counsel Tamara McKinzie and associate Patrick Johnson.
NorTex owns and operates two storage facilities with 36 billion cubic feet of working natural gas capacity. The facilities provide the Dallas-Fort Worth metroplex with 850 million cubic feet per day of maximum deliverability.
NorTex also owns and operates Tolar, a North Texas trading hub listed on the Intercontinental Exchange electronic trading platform.
Greenwich, Conn.-based Alinda is one of the world’s largest infrastructure firms with investments that operate in 33 U.S. states as well as in Canada, the U.K., the Netherlands, Belgium and Poland. Stamford, Conn.-based Castleton is a global commodity trader.
Locke Lord aids Intrepid on investment in Rio Grande E&P
Locke Lord said May 31 it advised Intrepid Investment Management, the investing platform of Intrepid Financial Partners, on its undisclosed investment in Rio Grande E&P.
The deal team was led by partner Joe Perillo and included partners Hunter Summerford, Eric Larson and Tammi Niven and associate Jennie Simmons.
In conjunction with Intrepid’s investment, Rio Grande completed its acquisition of Columbus Energy for $20 million before closing adjustments.
Rio Grande is a privately held company engaged in the acquisition, exploration and development of natural gas and oil assets in South Texas.
Jones Day’s Dermarkar does Texas two-step with deals for Teradyne, JF Lehman
Jones Day partner Alain Dermarkar in Dallas did the Texas two-step this past week, with the firm revealing he had recently advised two different clients on deals.
The first involved counseling Teradyne on its acquisition of Energid, a Cambridge, Massachusetts-based integrator, engineering firm and developer of robot control, simulation and machine vision software. Terms weren’t disclosed on the deal, which follows Teradyne’s purchase of Universal Robots in 2015.
Energid’s main product is Actin, a control framework and operating system for commercial, industrial and mission critical robots that is sold as a platform and software toolkit. Actin is being applied to robotics applications in the industrial, medical, aerospace and energy sectors to enable real-time advanced motion control.
Dermarkar also advised J.F. Lehman & Co. on the acquisition of SWS Environmental Services Inc. by its portfolio company, National Response Corp.
Great River, New York-based NRC provides compliance and environmental services through regional offices in the U.S. and internationally. It has 1,400 employees globally.
SWS offers environmental, industrial and emergency response services with 20 locations in 17 states in the Southeast, Gulf Coast and Midwest. J.F. Lehman partner Alex Harman said in a statement that SWS is NRC’s 10th add-on acquisition since the firm bought it in 2012.
National Oilwell Varco buys GustoMSC for undisclosed sum
Houston rig and equipment maker National Oilwell Varco, known as NOV, said Friday it bought GustoMSC, a Dutch rig design and engineering firm.
Terms weren’t disclosed, but GustoMSC was previously sold to Dutch private equity firm Parcom Capital in 2012 for $185 million.
NOV used attorneys at Dutch firm Stibbe on the deal. Inhouse counsel was led by Pete Vranderic, the company’s mergers and acquisitions counsel, with assistance from Karina Thisgaard, assistant general counsel for NOV unit Rig Technologies. Both are in Houston.
Other NOV attorneys involved included David Matthews, managing intellectual property counsel at Rig Technologies; Courtney Chester, compliance attorney/anti-corruption; Joe Taylor, senior counsel and director of anti-corruption; and John Patton, trade compliance attorney.
National Oilwell Varco’s general counsel is Craig Weinstock, who joined the company in 2014 after a 29-year career at Locke Lord in Houston. Before that the Vanderbilt-trained lawyer clerked for the Hon. Robert Parker, judge for the U.S. District Court in East Texas who went on to the Fifth Circuit and is now retired.
Consulting and data services provider Rystad Energy said June 1 that GustoMSC would consolidate National Oilwell Varco’s leading – but slipping – position in the market, as it’s designed about 10 percent of the active global jackup fleet and 8 percent of the active floater fleet. That places it second behind Friede & Goldman among rig design companies worldwide.
The acquisition also gives National Oilwell Varco two other key business units focusing on jacking equipment and skids as well as other vessel designs, Rystad said.
UPDATE:
Hunton Andrews Kurth said last week that it was involved in two midstream energy transactions previously reported by The Texas Lawbook.
Last month, partner Mark Young in Houston represented Tudor, Pickering, Holt as financial advisor to the conflicts committee of Shell Midstream Partners’ board on its purchase of the Amberjack pipeline from Royal Dutch Shell for $1.22 billion.
Young also advised Evercore as the financial advisor to the conflicts committee of Tallgrass MLP GP’s board on the March sale of Tallgrass Energy Partners to Tallgrass Energy GP for $1.678 billion in stock.