Selecting the Top 10 in anything is often a miserable task, and it is particularly difficult when selecting the top Texas-inflected business deals of 2021. We’ve looked at more than a thousand this year and each holds a large measure of importance to the companies involved and the lawyers advising them.
If for nothing else, 2021 is going to be remembered as the year business wrenched itself from the clutches of the coronavirus pandemic, or at least learned to live with it. So regardless of the numbers — they have been progressively impressive all year — the simple return to a seemingly normal business climate is something to celebrate.
Below are 10 deals the CDT Roundup thinks were, and are, important and for reasons other than their size. Often, especially for those outside the energy sector, they hold a significance that transcends the deal itself — either in the businesses they represent, or the way the deals were done. They are not ranked, only chronologically ordered.
February 2: Energy Transfer acquires Enable Midstream for $7.2 billion
Oklahoma-based Enable Midstream announced in February that it agreed to be bought by Dallas-based Energy Transfer for $7.2 billion in stock.
It was a no-premium deal emblematic of the kind of consolidation that has characterized the upstream oil and gas markets in the disruptive Covid era. Enable’s assets include 14,000 miles of natural gas, crude oil, condensate and produced water-gathering pipelines, primarily in Oklahoma, Texas, Arkansas and Louisiana.
Investors balked at Energy Transfer’s last major acquisition — SemGroup in 2019 for $5 billion — but Enable’s assets dovetail well with Energy Transfer’s, said then-analyst Pearce Hammond, now chief economist at Phillips 66.
Lots of lawyers were involved. Latham & Watkins advised Energy Transfer with a 24-member team led by Bill Finnegan and Kevin Richardson. Vinson & Elkins counseled Enable with a 34-member team led by partners David Oelman, Steve Gill and Scott Rubinsky.
Baker Botts represented CenterPoint Energy (with a team led by Timothy Taylor, Josh Davidson and Clint Rancher) and Jones Day represented OGE Energy Corp. (led by Jeff Schlegel and Lyle Ganske), the two main owners of Enable.
May 10: Bonanza Creek Energy, Extraction Oil & Gas combine to create Civitas Resources
When Bonanza Creek Energy and Extraction Oil & Gas, two publicly traded Denver-based companies, decided to combine in an all-stock deal, it was to create the largest pure-play oil and gas producer in Colorado’s Denver-Julesburg Basin with an enterprise value of about $2.6 billion.
The newly named Civitas didn’t stop there. In June the company added a second acquisition, Crestone Peak Resources, another leading energy producer in the region. Crestone counts the Canadian Pension Plan Investment Board as its largest shareholder. Both deals closed Nov. 1.
Bonanza Creek tapped Steve Gill at Vinson & Elkins. Kirkland & Ellis counseled Extraction with Doug Bacon in Houston and Alex Rose in Dallas. Gibson Dunn & Crutcher counseled Crestone with partner Gerry Spedale. And Jackson Walker, with a team led by Jesse Lotay, handled the oil and gas hedging transactions for both deals.
May 17: AT&T Inc. spins off WarnerMedia and a lot of debt
Dallas-based AT&T and Discovery Inc. — owner of the Discovery Channel — completed a $43-billion deal that created a standalone company to take over the WarnerMedia portfolio of sports, news and entertainment brands like HBO, CNN and Warner Bros. The deal included cash, debt securities and a chunk of AT&T’s debt, estimated by an Edward Jones analysis then at about $157 billion.
AT&T shareholders got about 71% of the new company with Discovery owning about 29% and Discovery’s David Zaslav moving in to lead it.
AT&T had agreed to acquire Time Warner in a 2016 merger for about $85 billion. That deal resulted in an epic legal battle with Department of Justice antitrust regulators that culminated in a six-week trial in 2018. AT&T won the case, which centered on the merger’s effect on consumer prices.
The deal is still pending federal approval but is expected to close in mid-2022. It has already won approval in the European Union.
May 24: Cabot Oil & Gas merges with Cimarex Energy
When Cabot Oil & Gas Corp. announced last spring its agreement to buy Cimarex Energy Co. for all stock, analysts scratched their heads.
The $17-billion merger involved disparate asset bases — Cabot operated in the Marcellus Shale in Appalachia while Cimarex was in the Permian and the Delaware basins of West Texas and New Mexico. Regulatory filings later revealed that Cimarex had merger talks with five other unnamed shale companies — one of which signed a non-disclosure agreement and exchanged private information. Cabot itself was in talks with two other undisclosed companies for a potential three-way merger.
When the dust settled, only Cabot and Cimarex were left, which ultimately decided to wed. Ted Paris and Clint Rancher of Baker Botts advised Cabot; lawyers at Wachtell, Lipton, Rosen & Katz counseled Cimarex.
June 2 and November 4: A $4.6-billion “twofer” for Southwestern Energy
Not only did Spring-based Southwestern Energy do one major acquisition in 2021, it did another in its effort to build scale.
In June, the company announced its $2.7-billion plan to acquire Yorktown-backed Indigo Natural Resources — the third-largest natural-gas producer in the country. Then in November, Southwestern agreed to buy Blackstone-backed GEP Haynesville — the third-largest private producer in the area — for $1.85 billion in cash and shares.
Skadden, Arps, Slate, Meagher & Flom counseled Southwestern on both deals led by M&A partners Frank Bayouth, Eric Otness and Cody Carper in Houston. Kirkland & Ellis was also on both deals: Houston corporate partners Cyril Jones, Andy Calder and Sean Wheeler on Indigo and Calder, John Pitts and Courtney Roane on GEP Haynesville. And Akin Gump Strauss Hauer & Feld advised Yorktown with Dallas partner Jesse Betts and Houston partner David Elder.
August 9: American National Insurance Co. acquired by Canadian firm
In a deal valued at $5.1 billion Texas lost another home-grown financial giant, American National Insurance Co., with its acquisition by a portfolio company of Brookfield Asset Management, based in Toronto.
Founded in 1905 by Texas businessman William Lewis Moody Jr., the Galveston-based company had been a fixture across Texas and beyond through the broad reach of the Moody family, the Moody Foundation and the Libby Shearn Moody Trust. Although American National is publicly traded, the two trusts have maintained control through the trust department of Moody National Bank. Also founded by Moody in 1907, Moody Bank is also headquartered in Galveston and is one of the oldest privately owned banks in the nation.
August 9: DraftKings acquires Golden Nugget Online Gaming Inc.
There was a lot to dwell on when this $1.56-billion deal was announced between DraftKings, the familiar Boston-based fantasy-sports site, and Houston billionaire Tilman Fertitta. There’s the role of online gambling and its relation to casinos. Fertitta owns the Houston Rockets, so there’s the sea change that has taken place between gambling of any kind and professional sports. And then there is the outsized and controversial role of SPACs in this particular deal.
SPACs are, of course, “special purpose acquisition companies” — corporations that go public with no purpose other than to find merger partners that want to go public without the rigorous regulatory demands of a regular IPO. DraftKings went public in April 2020 following its merger with Diamond Eagle Acquisition. In February 2021 Fertitta agreed to sell 40% in his chain of five casinos and nearly 600 restaurants to FAST Acquisition Corp, a SPAC, in a deal valued at $6.6 billion. The FAST deal also included Fertitta’s 46% interest in Golden Nugget Online Gaming.
But in early December, Fertitta tried to pull out of the FAST deal. FAST refused until last week, when Fertitta agreed to pay $33 million to exit. So the FAST deal is off, the DraftKings deal still on. And the whole mess is giving SPAC critics a lot to critique.
September 29: Shell sheds Permian position to ConocoPhillips
When Royal Dutch Shell unit Shell Enterprises announced plans to jettison its Permian Basin assets in ConocoPhillips for $9.5 billion, the deal represented a major shift in Shell’s focus on clean-energy transition.
Rumors of Shell’s exit from the basin peaked over the summer, first stoked by a key ruling in its Dutch homeland that compelled the oil-and-gas giant to cut its greenhouse-gas emissions at a quicker clip.
ConocoPhillips gained roughly 225,000 net acres producing about 175,000 barrels per day as well as more than 600 miles of operated crude, gas and water pipelines and infrastructure.
November 15: KKR acquires CyrusOne for $15 billion
In one of the biggest non-energy transactions of the year, KKR and Global Infrastructure Partners purchased CyrusOne, a Dallas-based data-infrastructure firm. What made the deal unusual, besides its $15-billion price tag, was the nature of CyrusOne itself.
CyrusOne constructs, operates and services high-performance data-processing and -storage centers throughout the Western Hemisphere and Europe. It counts among its customers at least 200 of the Fortune 1000. But it was formed as a real-estate investment trust, a REIT, and by purchasing all the outstanding common stock at $90.50 per share, the KKR/GIP consortium took private a Texas-based keystone in the world’s data infrastructure.
November 22: EQRx signs strategic agreement with Abdul Latif Jameel Health
Some deals stand out because they are deals that do something besides business. The agreement between EQRx, a Cambridge, Mass., alternative-pharmaceuticals company, and Abdul Latif Jameel Health is a business deal, but it is aimed at creating a distribution platform for low-cost treatments for non-small-cell lung cancer in low-income markets across Africa, the Middle East and Turkey.
The deal, which involves the drugs aumolertinib and sugemailmab, was handled by Stephen Olson, a partner at Gibson Dunn in Houston. Abdul Latif Jameel Health is a charitable arm of a family business founded by and named for a legendary Saudi dealmaker and is one of the premier PE firms to emerge from the Arab world. Gibson Dunn and Olson have advised the firm and its Global Oryx investment unit in such headline-grabbing deals as EV carmaker Rivian Automotive and Joby Aviation, the EV-aircraft manufacturer.
But Olson has also lent legal support on transactions similar to the EQRx deal. In March Olson and colleague David Sinak helped ALJ Health in a joint venture with Evelo Biosciences to develop and commercialize EDP1815, an investigation oral medicine gleaned from a pharmaceutically strained bacterium (Prevotella histicola) that has shown promise treating inflammatory diseases as diverse as psoriasis and Covid-19.
Sometimes it can be good business just to do good.