Mergers and acquisitions (M&A) in 2008 were characterised by a continued dearth of financing, volatile asset valuations and a general lack of confidence in the market. The net effect was a 29% drop in the total volume of worldwide M&A compared with 2007. 2008 also saw a record number of deals fail: 1,309 deals were withdrawn, totalling US$911 billion, compared with 2007 in which 870 deals were abandoned, totalling $US1,160 billion (Dealogic) (see box, Credit crunched: the deals that failed).
Market volatility left its stamp on the deals that did go ahead. The financial sector accounted for 19% of M&A volume, including Bank of America's swift acquisition of Merrill Lynch and Lloyds TSB's acquisition of the troubled lender HBOS (see box, Financial sector deals)
However, the news was not all grim. Through a combination of tenacity, creativity and careful planning, Belgian brewing giant InBev executed a successful takeover of American brewer Anheuser-Busch (Anheuser), owner of the iconic Budweiser brand, in the standout deal for 2008 and PLC's deal of the year.
The Anheuser/InBev transaction is noteworthy not only for its size and strategic importance, but for the many obstacles that InBev skilfully surmounted to close the deal. These included resistance from the Anheuser board and a wave of public outcry at the prospect of Budweiser coming under foreign ownership, not to mention the most severe credit squeeze in a century. The deal is also a rare example of an unsolicited bid with hostile beginnings ultimately being concluded on friendly terms.
Rumours of a possible transaction between the two brewers first surfaced in the Financial Times on 23 May 2008. The report claimed that InBev was working on a US$46 billion takeover bid, and was considering "whether to take a more aggressive stance" given that its previous informal approaches to Anheuser had been met with resistance from the Anheuser board (see box, Background to the deal). At this point executives from the two companies had not been in contact and Anheuser responded to the rumours by insisting that it was not for sale.
Senior executives at Anheuser first met with key InBev directors on 2 June 2008 in Tampa, Florida, and a non-binding proposal was sent on 11 June 2008. The proposal consisted of an offer of US$65 per share in cash on all outstanding shares, subject to due diligence.
Reports of a possible takeover by a foreign investor were unwelcome news to much of the American public, given their strong cultural identification with the Budweiser brand and the fact that the approach was unsolicited. "InBev knew going into the deal that they would be up against a fair amount of public skepticism from a variety of sectors. As a result, they prepared their own PR offensive to get their story out," says Jim Morphy (www.practicallaw.com/3-103-9463), a partner at Sullivan & Cromwell and counsel to InBev. "We were constantly walking a fine line between doing what was necessary to get the deal done - escalating steps toward that end, but at the same time seeking to avoid as much as possible turning the transaction into a full-blown hostile."
Opposition was particularly strong in St Louis, Missouri, which has been the headquarters of Anheuser since it was founded in 1860. As well as opposition to foreign ownership in principle, many feared that the takeover would lead to closures of US breweries and subsequent job losses. The controversy spawned organised public opposition groups, such as the saveAB.com website which gathered roughly 77,000 signatures in a petition against the merger. The Governor of St Louis and local trade unions also weighed in on the side of Anheuser, as did then Presidential candidate Barack Obama while on the campaign trail in St Louis.
On 26 June 2008, August A Busch IV, president and chief executive officer of Anheuser sent a letter to Carlos Brito, chief executive officer of InBev, rejecting the proposal. After due consideration the Anheuser board had concluded that the proposal of US$65 per share substantially undervalued the company, its assets and its prospects.
Anheuser was at the time reviewing its strategic growth plan and wanted to consider alternative options. However, August Busch had made it clear in his letter to InBev that the Anheuser board remained open to considering a proposal that "would provide full and certain value to Anheuser Busch shareholders", which put the ball back in InBev's court.
When Anheuser rejected its initial offer, InBev proposed to conduct a consent solicitation of Anheuser's shareholders under Schedule 14A of the Securities Exchange Act, requesting them to oust the current board and replace it with InBev's 13 nominees. InBev filed an action in the Delaware Chancery Court on 26 June 2008 seeking a declaration that the entire Anheuser board could be removed without cause.
A declaration was sought because the board removal provision under Delaware law does not permit removal without cause if the board is classified (Section 141(k), Delaware General Corporation Law). While Anheuser's board was declassified in April 2006, five of the directors were still serving terms under the classified system. (In a classified board, directors are separated into groups so that only a portion of them stands for election each year. However, in a declassified board directors stand for election every year for one-year terms.)
According to Frank Aquila, a partner at Sullivan & Cromwell and counsel to InBev, "This proceeding was a part of the overall strategy to turn up the heat a bit and let Anheuser and the market know that InBev was serious, but without attacking the company, its directors or management or alleging any wrongdoing. The action was on a narrow technical legal point, but it clearly signalled that InBev's offer was a serious one and InBev was not going to go away."
On 7 July 2008, the same day that InBev filed its preliminary consent solicitation with the Securities and Exchange Commission, Anheuser filed a suit against InBev in the federal district court in the Eastern District of Missouri in St Louis.
The case alleged proxy fraud under Rule 14a-9 and Section 14(a) of the Securities Exchange Act, regarding InBev's alleged failure to disclose the conditions attached to its financing commitment. Anheuser also questioned how InBev could make St Louis the North American headquarters for the combined company (as InBev had said it would do), given that InBev operates in Cuba and American companies cannot do business in Cuba due to federal boycott laws.
As is common in takeovers in the US, Anheuser also had to deal with a fair amount of shareholder litigation. Between 11 June and 13 July 2008, 14 shareholder derivative suits were filed against Anheuser, either in Delaware or St Louis, mainly alleging breach of fiduciary duties by the directors either because they were or were not considering InBev's proposal.
A further hurdle was raised by Mexican brewer Grupo Modelo, of which Anheuser owns 50%. According to a 1993 Investment Agreement which governs the relationship between Anheuser and the rest of Modelo's shareholders, Anheuser cannot sell its Modelo shares without first offering those shares to the other Modelo shareholders. The agreement also provides that Anheuser cannot sell its Modelo shares to a competitor, which is defined as a company engaged in the production, distribution or sale of beer in the US or Mexico. InBev is likely to qualify as a competitor under the 1993 agreement. Modelo had made it clear that it believed the agreement prevented a deal between InBev and Anheuser.
InBev continued to publicly reiterate its commitment to combining the two companies, while the Anheuser board looked into other strategic alternatives. Before pursuing these alternatives, the Anheuser board approached InBev and asked for its best and final offer.
On 9 July 2008, InBev made a revised offer of US$70 per share in cash and indicated that it had already secured committed financing for the deal. The Anheuser board considered the revised offer in light of its other alternatives, and after receiving advice from investment banks Goldman Sachs and Citigroup, determined that accepting the offer was in the best interests of the company and the shareholders. The parties entered into a confidentiality agreement allowing InBev to undertake due diligence and began to negotiate the merger agreement.
On 13 July 2008 it was announced in a joint press release that both boards of directors had unanimously approved an agreement to combine the two companies under the US$70 per share offer (subject to subsequent shareholder approval), creating a deal with an aggregate equity value of US$52 billion.
"Many commentators and market analysts had predicted that this deal would never get done, or that if it did it would only be after a long, protracted and bloody battle," comments Aquila. "However, one of the remarkable features of the deal is the speed with which it was ultimately concluded." It was a mere 32 days from the first offer to the announcement of an agreement, which is particularly noteworthy given that the deal was unsolicited.
The InBev board had been considering a move with Anheuser for a long time, and was thoroughly prepared for how the deal might play out at each stage. According to Morphy, "The deal was a strategic move for InBev rather than just a financial one. We all recognised that success at the end of the day would be measured by the degree to which the combined company would enjoy, and benefit from, the co-operation and goodwill of all the people associated with Anheuser after the deal was closed. The board did not want to have a successful acquisition of a company that had been torn apart and totally disrupted. Each move we made had that end objective in mind." The fact that several key Anheuser employees took up leadership positions in the combined company (including former Anheuser CEO August Busch as a board member) is further proof of this objective being met.
When the agreement was reached, both parties terminated their respective law suits against each other, and Anheuser settled its outstanding shareholder litigation. However, Grupo Modelo filed a notice of arbitration, claiming the deal violated the 1993 agreement between Anheuser and the other Grupo Modelo shareholders. InBev and Anheuser commented that they believed the claim was without merit.
Given the sensitivity surrounding Anheuser coming under foreign ownership, the merger agreement contained several "social" provisions that are not usually found in takeover agreements where the bid is unsolicited. For example:
InBev changed its name to "Anheuser-Busch InBev" (AB InBev).
St Louis, Missouri, remains the North American headquarters and the global headquarters of the Budweiser brand.
Two current or former Anheuser directors will serve on the board of directors of AB InBev (one of whom is August Busch).
AB InBev will preserve Anheuser's heritage and will continue to support charitable and philanthropic causes in St Louis and other communities in which Anheuser operates.
Anheuser will continue to honour its obligations in relation to Busch stadium.
InBev made a good faith commitment to keep open Anheuser's 12 US breweries, and also committed to using the existing three-tier distribution system and Anheuser's wholesaler panel.
It was important for Anheuser to have a high degree of certainty that the deal would close. This was reflected in the merger agreement, which was relatively target-friendly in that it contained very few "outs" for InBev. For example, there was no financing condition in the merger agreement, which put more pressure on InBev to obtain definitive credit agreements, though the state of the credit markets made this prudent anyway (see Committed Financing).
The "material adverse effect" definition was set at a high level and excluded, among other factors, any effects resulting from changes in the economy or financial, credit, banking, or capital markets in the US or other countries. There was a reverse termination fee only in the event that the InBev shareholders did not approve the deal (which was very unlikely given that InBev had voting commitments for nearly all of the required vote). Under the agreement, Anheuser had full recourse to recover damages against InBev in the event that the deal did not go through, including suing on behalf of Anheuser shareholders to recover damages against the lost premium to the share value.
If the deal did not close, both parties were authorised to obtain an order for specific performance of any clause of the agreement, including, in the case of Anheuser, causing InBev to enforce the terms of its financing with its lenders, and forcing InBev to consummate the merger.
These rights were ultimately not needed because a majority of InBev and Anheuser shareholders approved the transaction on 29 September and 12 November 2008 repectively. When the transaction completed on 18 November, Anheuser shares ceased trading and the company became a wholly-owned subsidiary of InBev.
Under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, the parties were required to file notification and report forms with the Federal Trade Commission (FTC) and the Department of Justice (DoJ), which they both did in July 2008.
In November 2008, the transaction received regulatory approval from the DoJ, after an agreement was reached requiring InBev to divest one of its subsidiaries, Labatt USA. This is because Anheuser's Budweiser and InBev's Labatt brands are the two biggest-selling beer brands in Buffalo, Rochester and Syracuse, New York. The DoJ said that the transaction, as originally proposed, would likely have led to higher prices for beer in these areas.
"For a transaction of this size, the required divestiture is actually quite small. There was little geographical overlap between the two companies, so anti-trust considerations were never going to be a major hurdle to getting the deal done," says Aquila.
Even so, the size of the transaction and the geographical spread of the two companies' brands meant that regulatory approvals were also required, and received, in various other jurisdictions, including the UK, Brazil, Germany, Mexico and China.
The regulatory approval by China's Ministry of Commerce (Mofcom) was significant not only because it was the first merger decision made under China's new anti-trust laws, but because of the surprising restrictions that Mofcom placed on AB InBev acquiring future interests in Chinese breweries.
Mofcom ruled that, while the transaction would not adversely affect competition, InBev cannot increase its 28.5% stake in Zhujiang brewery or Anheuser its 27% shareholding in Tsingtao brewery (as part of an ongoing deleveraging plan, AB InBev has since sold 19% of its Tsingtao stake to Asahi). Further, the decision prevents InBev from acquiring shares in two other large Chinese brewers. Imposing future conditions on a deal that does not harm competition is unprecedented in international anti-trust decisions, and could have potential ramifications for future M&A transactions in China involving foreign investors.
At US$52 billion, the deal is the world’s largest ever all-cash offer. An all-cash offer was preferable to offering a mixture of cash and InBev shares, given the restrictions contained in the charter documents of some of Anheuser's institutional shareholders preventing them from investing in foreign companies, as well as the general volatility of the share market at the time.
Given the disarray of the credit markets, it was clear that the deal could not be financed in the usual way that US deals are financed, which is through debt commitment letters from lenders. Instead, InBev used a certain funds financing structure (common in the UK), which places far fewer conditions on loans than typical US financing rules, and has the advantage of financing terms being fixed before the deal is agreed. (For more information on certain funds, see Financing acquisitions of companies in the UK and the US (www.practicallaw.com/5-379-9337).).
The bank lending group provided US$45 billion debt financing and commitments for up to US$9.8 billion in equity bridge financing, to allow for some flexibility in relation to the timing and form of equity financing for a period of up to six months after closing.
Given the general lack of liquidity in the credit markets, the bank lending group was much larger than it would have been before the credit crunch. Arranging the financing required a vast amount of co-ordination and effort, both legal and financial, and was led by Roderick McGillivery, a partner at the London office of Clifford Chance LLP. The lending group started with a few lead money centre banks, and was gradually expanded to consist of 19 banks, from across Europe, North America and Asia. "A lot of thought went into the lending terms and the syndication strategy. The larger banking group demonstrated the wide support for the transaction and, at the same time, required everyone involved in the financing to be highly responsive to the additional demands imposed by the turbulent credit markets," says McGillivery.
Both InBev and Anheuser were concerned to ensure the conditions of the financing agreements with the lenders were sufficiently tight to provide certainty that the deal would close. "Obviously the deal was proceeding against a deteriorating market. For a lawyer, the challenge was to ensure that the terms of the deal adequately anticipated the future risks," says McGillivery. One of the main lender protections in the credit agreements was that the lenders could pass on the deal if there was a ratings downgrade on either company to below investment grade.
According to Aquila, "We were very fortunate that we had financing commitments arranged by June/July of 2008, because things got much tighter in September and onwards after Lehman Brothers collapsed."
It was a condition of the equity bridge financing agreement that the loan be refinanced within six months of the transaction closing. InBev proposed to undertake a rights issue on the Euronext Brussels Exchange to raise cash to repay this loan. The rights issue was originally set for October but the company postponed it due to "unprecedented volatility in the global capital markets" (InBev press release, 14 October 2008).
"October was a particularly difficult time in the market, and InBev’s share price had already dropped, in part because of rumours that the transaction would not close. It therefore made sense to postpone it until December when the deal had completed and the markets had stabilised somewhat," says Christopher Bernard, a partner at Allen & Overy LLP who advised the rights issue underwriters, including BNP Paribas, Deutsche Bank and JP Morgan.
The eight-for-five rights issue was priced at a discount of nearly 70% to the current share price, and about 46% to the theoretical ex-rights price. Such a deep discount is unusual in rights issues, and in this case reflected the market conditions that existed at the time, as well as InBev's determination that the issue be a success.
InBev's two major shareholders (the Brazilian and Belgian families that respectively owned a majority of AmBev and Interbrew before their merger to form InBev) committed to investing EUR2.8 billion (about US$3.6 billion) in the rights issue. "The fact that InBev's biggest shareholders were taking up so many rights meant that there would be fewer rights potentially sold on the market in a rump placement by the underwriters. It was an important show of support which gave confidence to other investors," says Bernard.
The issue raised EUR6.36 billion (about US$8.2 billion), making it the largest rights issue by a non-financial institution in 2008, and the third-largest ever. At closure the issue was 99.58% subscribed. The rump was placed by the underwriters shortly after.
AB InBev has committed to raising a further US$7 billion in the coming year by selling off non-core assets. The divestiture of 19% of Anheuser's stake in Tsingtao in January 2009 was part of this plan, which is also likely to include the sale of Anheuser's amusement parks.
On 7 January 2009, AB InBev sold US$5 billion of bonds in its biggest ever debt sale.
AB InBev plans to expand the global revenue of Budweiser and Bud Light, which are the biggest-selling beers in the world. "While InBev has several leading beers in various markets, it wanted an international brand that it could really develop globally. Budweiser fits that description," comments Aquila. InBev is the number one brewer in ten markets where Budweiser has a very limited market share, and has a superior footprint in nine markets where Budweiser is already present.
AB InBev expects that combining the companies will lead to cost synergies of at least US$1.5 billion annually by 2011, phased in over three years. The board of directors envisaged these synergies being driven through "sharing of best practices, economies of scale and rationalisation of overlapping corporate functions" (Press release, 14 July 2008).
However, the lack of geographical overlap of the two companies' markets has led some analysts to question the extent that the merger will create synergies and save costs (The New York Times, 14 July 2008). On the other hand, the fact that before the merger there was little geographical overlap between the two companies means that the combined company now has a worldwide brand portfolio and a significant global distribution network.
Some cost savings have already been implemented, with AB InBev announcing in December 2008 plans to lay off 1,400 workers, or 6% of its US workforce.
According to Aquila and Morphy, the Anheuser/InBev deal shows an evolution in the way unsolicited bids can proceed. "Unsolicited bids are just another tool in the chest of the strategic buyer. There will be tough decisions to make, but the Anheuser/InBev deal shows that you don't necessarily have to go hostile to succeed in an unsolicited bid," says Aquila.
"The key to success is always preparation and planning," adds Morphy. "Know what you are ultimately trying to achieve, and prepare a strategy for each likely scenario to get you there. Time spent with the board and management team well in advance of launching a bid and taking them through the expected twists and turns of a deal is time very well spent. If the board and management are informed of what to expect at each stage, this will help them stay focused and feel in control of the situation."
There was a steady stream of unsolicited bids in 2008, including those made by Microsoft, BHP Billiton, United Technologies and Samsung. Aquila expects this to continue in 2009, "The continuing trend towards global consolidation, the current level of economic uncertainty and the recent dramatic drop in share prices comes at a time when seller expectations remain high and unsolicited bids are becoming increasingly respectable."
Alarna Carlsson-Sweeny, PLC Cross-border
With a history stretching back to 1860 and headquartered in St Louis, Missouri, Anheuser-Busch (Anheuser) was one of the world’s most profitable brewers and owner of the iconic Budweiser brand. While Anheuser had continued to be profitable in the past few years, its growth in the US beer market, which accounts for 80% of its sales, was limited, and its share price had been relatively stagnant (The Telegraph, 23 May 2008).
While strong in the US and parts of Europe, Anheuser lacked a strong presence in the emerging markets. It owns 50% of Mexican beer maker Grupo Modelo, and, until recently, 29% of China's biggest brewer, Tsingtao. It also owns China's fifth-largest brewer, Harbin, but does not have any meaningful presence in other emerging markets.
InBev, itself a product of a merger between Interbrew of Belgium and Brazil's AmBev, is headquartered in Leuven, Belgium. Its best-known brands include Stella Artois and Becks.
Unlike Anheuser, InBev has a strong position in the emerging markets, particularly in Russia and Brazil, but it did not have a strong brand in the US. It also lacked a truly global brand (like Budweiser).
InBev had previously expressed interest in combining with Anheuser, but no formal approach was made until mid-2008. For InBev, acquiring Anheuser was a swift way to effect a strong entrance into the US, and expand its global reach with the well-known Budweiser brand. The lack of geographical overlap between the two companies means that the merger has significantly increased InBev's portfolio of brands and global distribution network.
Before the merger, the companies already had a partnership in the US – Anheuser used its distribution network to sell certain InBev brands like Bass. InBev distributed Budweiser in Canada.
Sullivan & Cromwell LLP (New York): Lead counsel. Advised on all US corporate and M&A aspects of the deal, anti-trust, litigation, benefits and tax. Also co-ordinated advice from other jurisdictions where necessary.
Led by Frank Aquila, Jim Morphy, George Sampas, George White (London), Yvonne Quinn, David Tulchin, Ted Edelman, Hydee Feldstein (Los Angeles), Sergio Galvis, Erik Lindauer, Ron Creamer, Marc Trevino, Brian Frawley and Neal McKnight.
Clifford Chance LLP (www.practicallaw.com/resource.do?item=:20263368) (London): Advised on the financing of the deal and non-US competition related aspects. Led by Roderick McGillivery, Greg Olsen and Simon Baxter (Brussels).
Linklaters LLP (www.practicallaw.com/resource.do?item=:20263419) (Brussels): Advised on rights issues. Led by François De Bauw and Gilles Nejman.
Skadden Arps Slate Meagher & Flom LLP (www.practicallaw.com/resource.do?item=:20904006) (New York): Lead counsel. Advised on all US corporate and M&A aspects of the deal. Led by Tom Greenberg, Paul Schnell, Richard Grossman, Mark Smith, Joseph Flom and Jay Kasner.
Simpson Thacher & Bartlett LLP (www.practicallaw.com/resource.do?item=:20263457)(New York). Advised the independent directors of Anheuser. Led by John Finley and Charles "Casey" Cogut.
Allen & Overy LLP (www.practicallaw.com/resource.do?item=:20263374) (London). Advised Banco Santander, Barclays Capital, BNP Paribas, Deutsche Bank, Fortis, ING, JP Morgan, Mizuho, The Bank of Tokyo-Mitsubishi and The Royal Bank of Scotland. Led by Nicholas Clark and Melissa Samuel.
Allen & Overy LLP (www.practicallaw.com/resource.do?item=:20263374) (London). Advised underwriters including BNP Paribas, Deutsche Bank and JP Morgan as joint global co-ordinators and joint bookrunners. Led by Christopher Bernard, Richard Browne and Dirk Meeus (Brussels).
Allen & Overy LLP (www.practicallaw.com/resource.do?item=:20263374) (London). Advised Banc of America Securities LLC, Barclays Capital, Deutsche Bank and JP Morgan as joint bookrunning managers and the other managers. Also advised the trustee, Bank of New York Mellon. Led by Christopher Bernard, Adam Kupitz and Peter Bienenstock (Brussels).
In November 2008, BHP Billiton, the world's largest mining company, gave up its year-long pursuit of Rio Tinto, an Anglo-Australian mining company. Had it gone forward, a merger between the two dual-listed companies would have been the biggest takeover in the mining sector, the second-largest corporate takeover, and would have created a firm with a third of the world's iron ore market.
However, the rapid drop in commodity prices brought about by the economic downturn made the deal less attractive for BHP Billiton. The value of BHP's all-share bid fell from more than US$140 billion when it was first announced in November 2007 to around US$62 billion in November 2008. This followed a raid on Rio Tinto shares by China's state-run Aluminium Corp, or Chinalco, which teamed up with US-based Alcoa to buy a 9% stake in Rio Tinto's London listed shares for 11% greater value than BHP's proposed all-share offer.
The situation took another turn in February 2009 when Rio proposed to sell US$7.2 billion in convertible bonds to Chinalco which could double Chinalco's stake in Rio to 18%. Existing shareholders expressed anger at the proposal, as they were not offered a right of first refusal. BHP is reportedly watching the situation closely.
BHP: Slaughter and May (UK); Blake Dawson (Australia).
Rio Tinto: Linklaters LLP (www.practicallaw.com/resource.do?item=:20263419) (UK); Allens Arthur Robinson(Australia).
The proposed C$52 billion (about US$41.7 billion) takeover of BCE, a Canadian telecoms group, would have been the world's largest leveraged buy-out. The private equity consortium (consisting of Ontario Teachers Pension Plan, Providence Equity Partners, Madison Dearborn Partners, Kohlberg Kravis Roberts & Co. and Onex Corporation) had originally agreed to buy a combined 84% equity stake in BCE.
From the time the transaction was first agreed in June 2007, the parties faced significant challenges to complete the deal, including changes to the company's corporate governance structure as well as defending a case brought by BCE's bondholders all the way to the Supreme Court of Canada. However, the final straw came when KPMG, the auditor, concluded that the amount of debt the deal would require BCE to take onto its balance sheet would risk the company failing to meet solvency tests. The collapse of the deal was arguably good news for the banks that had agreed to finance it. The group of lenders, led by Citigroup, would have faced writedowns of some C$10 billion (about US$8 billion) on the C$34 billion (about US$27.3 billion) financing package (Financial Times, 11 December 2008.)
In December the consortium offered to purchase a fraction of the company rather than abandon the deal. Litigation followed when BCE sought the C$1.2 billion (about US$1 billion) break-up fee, accusing the consortium of "prematurely and invalidly" terminating their offer before the effective time on 11 December 2008.
Consortium: Weil, Gotshal & Manges; Goodmans LLP.
BCE: Davies, Ward, Phillips & Vineberg LLP; Stikeman Elliott LLP; Sullivan & Cromwell LLP.
In February 2008, Microsoft made an unsolicited bid of US$44.6 billion in cash and shares for Yahoo!, the search engine company. The bid represented a premium of 62% on Yahoo's then share price. Yahoo! rejected the offer, and Microsoft withdrew it in May.
Former CEO and co-founder of Yahoo! Jerry Yang was defiant that his company would remain independent and argued that the offer undervalued the company, though this point of view was apparently at odds with other Yahoo! board members.
In November 2008, Microsoft was in talks to buy Yahoo!'s online search business for US$20 billion. Under the proposal, Microsoft would support a new management team to assume control of Yahoo!, but Microsoft did not intend to attempt another takeover. The appointment of Carol Bartz in January 2009 to replace Yang may increase the possibility of a search deal between Yahoo! and Microsoft going ahead.
The scuffle was good news for Google, which saw its share price soar during the takeover attempt.
Microsoft: Sullivan & Cromwell LLP.
Yahoo!: Skadden, Arps, Slate, Meagher & Flom LLP.
2008 saw a spate of bank sales, mergers, nationalisations and bankruptcies as well as an unprecedented level of state intervention, which left the global banking industry almost unrecognisable. Here are three of the highest profile deals:
Bank of America Corporation agreed to buy Merrill Lynch, the world’s largest stockbroker, in September 2008, just days after the collapse of rival Lehman Brothers. The US$50 billion all-stock transaction valued Merrill Lynch at US$29 a share, a 70% premium over the closing price. Bank of America CEO Ken Lewis has since been criticised for the swift acquisition, as Merrill Lynch has continued to reveal heavy losses.
Bank of America: Wachtell Lipton Rosen & Katz
Merrill Lynch: Shearman & Sterling
In September 2008 during the worst days of the financial turmoil, Lloyds TSB agreed a UK£12 billion (about US$17.4 billion) rescue takeover of HBOS, the UK's largest mortgage lender and savings institution. In a controversial move, the UK government waived competition rules to allow the merger to go ahead, creating the UK’s largest retail bank. The merger was seen as necessary to restore confidence in HBOS after the rising cost of wholesale funding and a sharp decline in its share price raised concerns about its ability to fund itself.
The government was keen to broker a market solution to HBOS's woes to avoid a repeat of Northern Rock, which was nationalised in February 2008. However, the HBOS/Lloyds TSB deal was renegotiated in October 2008 as both parties accepted government funding in exchange for certain management controls.
Lloyds TSB: Linklaters LLP
HBOS: Allen & Overy LLP
After Lehman Brothers filed for bankruptcy, its assets were up for sale. On 16 September 2008 Barclays agreed to purchase Lehman Brothers' North American investment banking and capital markets businesses, which significantly bolsters Barclays' US presence. Barclays acquired trading assets with an estimated value of US$72 billion and trading liabilities with an estimated value of US$68 billion for a cash consideration of US$0.25 billion.
Barclays: Clifford Chance LLP
Lehman Brothers: Cleary Gottleib Steen & Hamilton LLP