LyondellBasell Associate General Counsel Andrew Gratz was working day and night in summer 2020 dealing with Covid-19 related issues, including examining contract obligations and demands from the federal government for certain products.
As the leader of a team providing legal support and counseling for LyondellBasell’s sales in the Americas, Gratz oversees the review and negotiations of contracts and joint venture arrangements that account for $20 billion in annual revenues for the petrochemical giant. He also leads the legal support for the company’s capital projects in the Americas, business development and public affairs.
In the midst of this, and working from home, Gratz received a call from LyondellBasell’s business development group that explores mergers and acquisitions.
Sasol, a South Africa-based chemicals company with $12 billion in annual revenues, needed to raise cash and was seeking to sell 50% of its ownership in an ethane and polyethylene operation in St. Charles, Louisiana.
Bankers representing Sasol were seeking bidders. LyondellBasell, if interested, had limited time to put together a proposal.
“It was a typical auction process,” Gratz told The Texas Lawbook. “We kept the initial working group small – only five or six people knew. We submitted the most promising proposal and that is when the real heavy work started.”
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Over the next several weeks, Gratz and his team worked 16-hour days or more. To accommodate the time differences between Houston and South Africa, negotiations often started at 6:30 a.m. Houston time and went until midnight in South Africa. Both sides had to track the other’s time zones.
“We needed to know how the joint venture would be managed, how product would be marketed and sold – there were so many questions that needed to be researched by and discussed with multiple teams from within the company and different teams within the legal department. We also needed to complete our due diligence in record time to ensure LyondellBasell’s strategy for the transaction could be advanced with the proposed assets and consideration.”
Gratz hired Houston M&A expert Bill Benitez and his team at Kirkland & Ellis as lead outside counsel.
“In a deal of this size, we would normally put our joint teams in conference rooms and have them start working things out, but we were all virtual because of Covid,” Gratz said. “All communications were via Microsoft Team Meetings, and that meant it took longer for us to build the relationships and trust we needed with the Sasol folks. Normally, there is a camaraderie that develops between the negotiating teams, but because of the virtual nature of our negotiations, this requisite trust took much longer to build.”
Then came Thursday, Oct. 1, 2020. It was Gratz’s birthday. He turned 44.
And that morning, LyondellBasell announced it had reached an agreement to purchase 50% of Sasol’s 1.5 MM ton ethane cracker, 0.9 MM ton low and linear-low density polyethylene plants and associated infrastructure in Lake Charles for $2 billion. The joint venture agreement included the operation and maintenance of the assets, as well as the equity arrangements and governance.
The Association of Corporate Counsel’s Houston Chapter and The Texas Lawbook have named Gratz and the Kirkland legal team led by Benitez as finalists for the 2021 Houston Corporate Counsel Award for Transaction of the Year.
The Transaction of the Year Award is unique because it honors both the in-house counsel who led the deal and the outside lawyers who provided their expertise to make sure the transaction was successful. Business Litigation of the Year and Creative Partnership are the two other categories that recognize both.
Houston ACC and The Lawbook will honor the finalists and announce the winners of the 2021 Houston Corporate Counsel Awards at an event at the Four Seasons on Jan. 13.
Gratz with Kirkland partner Bill Benitez (at right)
The Sasol/LyondellBasell transaction closed Dec. 1. It was Gratz’s second $2-billion M&A deal for LyondellBasell in three years.
“Andy was the force of nature that kept everything in order and moving efficiently,” said Benitez, a partner in Kirkland’s M&A practice in Houston. “The joint venture allowed the company to expand in a core area of its business and leverage the company’s operational and commercial strengths. By investing in the target assets, the company realized immediate returns and eliminated customary construction risks associated with new project execution.
“The target asset carve-out and joint venture elements of the transaction required many months of meticulous coordination by Andy across many functions within Lyondell, including regulatory, environmental, real estate, tax, human resources, intellectual property, commercial, senior management and the board,” Benitez said.
Gratz said he had never worked with Kirkland before the Sasol deal.
“Bill and his team did a great job,” he said. “He had to bring in lawyers from other sections, including HR and benefits and environmental. It required Bill to manage a lot of his peers.”
Lawyers who work with Gratz say he combines a strong grasp of legal issues and a fundamental understanding of business in reaching success.
“Finding the balance between good legal judgment and accomplishing the company’s commercial objectives is the most challenging skill for lawyers, and Andy has found that balance,” said Ryan Hopkins, a partner at White & Case in Houston. “Andy is present, focused and responsive. He doesn’t get distracted by the noise during a deal, instead using good questions that lead to informed decisions. He also ensures that he and his team are not creating obstructions that slow the deal.”
Vinson & Elkins chair Mark Kelly agrees.
“Andy is smart, direct in his communication, thoughtful in his decision-making and pragmatic,” Kelly said. “Andy is keen to develop relationships. He came over to our firm to explain to us what’s important to him and to the company.”
Born in the Bronx, Gratz moved with his family to Las Vegas in 1984 when he was 7 years old. His father worked for several years as a nighttime casino security officer.
An early memorable moment for Gratz came in 1992 when he was a junior in high school and watched the inauguration of President Bill Clinton as part of his government class.
“I was transfixed – everything about it was fascinating,” Gratz told The Texas Lawbook in an in interview in 2019. “I wanted to go to the nation’s capital for college, and I went to American University with every intent of getting into politics.”
While in Washington, D.C., he gained invaluable experience working in a congressional office on Capitol Hill, with a public-policy newsletter and for the American Gaming Association, a casino-industry trade group.
Gratz was the first person in his family to go to college. Upon graduation, he moved back to Nevada where he worked on three political campaigns.
“We lost all three races,” said Gratz, who also attended the 1996 Republican National Convention in San Diego. “I decided then that politics was not for me.”
At the time, Gratz was dating a woman who lived in Texas. He applied to the University of Houston Law Center. The law school accepted him and so did his girlfriend, as they were later married.
“There were no lawyers in my family, and the only basis I had for being a lawyer was what I had seen on TV and I decided I would be a litigator,” he said.
Gratz joined the litigation section of Gardere Wynne Sewell in 2002, where he focused on labor and employment cases and commercial disputes.
“When I was practicing litigation, I felt something was off and I was miserable,” he said. “Accordingly, I decided to pursue an MBA at night with the full assumption that when I finished, I was going to leave the practice of law.”
Gratz said he learned, however, that it wasn’t the practice of law he disliked, it was litigation.
“In litigation, each party is aiming for a different target,” he said. “There’s no shared goal. It just wasn’t for me.”
Gratz went back to school even as he continued to practice law at Gardere. In 2006, he received his MBA from the University of Texas at Dallas in 2006. A few weeks later, he accepted an offer from Baker Botts, where he spent two years working on mergers, acquisitions, securities and corporate governance.
“Corporate work allowed me to collaborate and work with people to accomplish the same goal,” he said.
In the summer of 2008, a recruiter called Gratz to gauge his interest in going in-house.
“While I was happy at Baker Botts, the idea of going to work as a part of a large global energy company was exciting,” he said. “I liked the idea of working for one client and helping that client achieve its strategic and commercial goals.”
Three months after joining LyondellBasell as senior counsel, Gratz received a phone call at home from his boss.
“He told me that we were about to file bankruptcy and asked if I wanted to be on the team preparing the company for bankruptcy,” Gratz said in the 2019 interview. “Every single day, we were never sure we would have a job at the end of the day. There were a lot of goodbye parties every few days at the Flying Saucer. Every Friday, we would wait to see if our paychecks cleared the bank. Seriously, I’m not kidding.”
“At that point, I had a choice to make – leave, which many did, or stay the course and try to help the company survive and successfully emerge from Chapter 11,” he said. “I decided to stay, and I’m very proud of the how the company has thrived since that dark day.”
Gratz played a critical role in LyondellBasell’s complex and highly successful restructuring. LyondellBasell filed its Chapter 11 petition in January 2009, as the credit markets were collapsing and the country was in the midst of the Great Recession. The company shed more than $20 billion in debt and exited bankruptcy as a strong and focused business operation 15 months later.
In 2018, Gratz led LyondellBasell’s successful acquisition of Ohio plastics maker A. Schulman for $2.25 billion.
“Andy is a skilled negotiator and problem-solver,” said Shearman & Sterling partner George Casey, who has worked with Gratz on multiple transactions. “Dealmaking is an art, and Andy’s experience makes him a highly valued member of the negotiation team. He sees deal issues, is able to identify counterparty’s interests and, while staying focused on the goals that his team would like to achieve, Andy helps find creative solutions to get to a win-win in a deal.”
The A. Schulman acquisition had multiple complexities that required creativity. A significant issue in the transaction was the development of a structure that could provide the seller’s shareholders with the benefit of any recoveries resulting from certain pending litigations received after the transaction closed.
The administration of the matters being litigated, allocation of litigation costs and payment of any recoveries to seller’s shareholders, among other terms, needed to be determined. To address the issue, Gratz and his team added what is known in M&A circles as contingent value rights, or CVR, to the acquisition agreement.
“The use of CVRs in this transaction is noteworthy, as CVRs are highly unusual in nonpharmaceutical M&A transactions,” Gratz said. “However, to get the deal done and advance the strategic goals of the company, we decided to propose creative ideas to bridge the parties’ fundamental differences in valuation.”
LyondellBasell Chief Legal Officer Jeff Kaplan describes Gratz as “freakishly smart and very tenacious.”
“Andrew is a Swiss Army knife in that he has several practice areas in his background, and he has mastered all of them,” Kaplan told The Texas Lawbook in an interview in 2018.
Then came the summer of 2020 and the Sasol deal during the depths of the Covid pandemic.
Benitez said the complexities of the carve-out transaction required a long time-horizon to complete the due diligence, negotiation and finalize documentation.
“Andy is persistent and able to maintain high levels of energy for extended periods of time,” Benitez said. “There were countless calls and video conferences during the height of the pandemic with deal fatigue eventually rampant on both sides during the final stages of the transaction.
“Andy was as fresh on day 100 as he was one day one – always focused on the end goal, never giving up and pulling others with him until the very end,” he said.