WASHINGTON D.C., January 11, 2019 – Baker Botts L.L.P., a leading international law firm, announced today that the firm’s global Antitrust and Competition Law Practice once again has risen in the rankings in Global Competition Review’s (GCR) latest edition of GCR 100. Baker Botts’ Antitrust Group, under the leadership of Chairs John Taladay, Maureen Ohlhausen and Steve Weissman in D.C. and Catriona Hatton in Brussels, saw its ranking rise to 14th globally.
In addition to its Global Elite status, GCR selected Baker Botts’ Antitrust and Competition Law Practice as “Outstanding” amongst its competitors in Washington, D.C., “Recommended” in Brussels and “Highly Recommended” in Texas.
“We are very pleased with our continued upward movement in GCR’s Global Elite rankings,” said John Taladay, firmwide Co-Chair of the Antitrust & Competition practice group. “This movement reflects the breadth and complexity of the work we are asked to do for our international client base and shows our commitment to fielding a leading team, drawing on our resources on both sides of the Atlantic for competition work.”
GCR notes the strong momentum the firm’s practice has established within the past year and its solid performance.
In the last six months of 2018, Baker Botts Antitrust practice hired five leading competition partners in Washington, D.C., Brussels and San Francisco, as well as promoted a stellar senior associate to partner. These hires include Maureen Ohlhausen, who is a highly recognized expert, having served as Acting Chair and Commissioner to the FTC over the past six years.
GCR also highlighted the Antitrust practice’s diverse work in 2018, “following a solid year advising clients in complex merger control matters and in long-running cartel probes,” as well as in private litigation.
To review the complete GCR 100 rankings, click here.
HOUSTON, January 15, 2019 – Looking at the year ahead, Baker Botts’ Corporate partners share their insights on M&A, Investment, Private Equity, and Financing.
Brian Lee, Palo Alto based Corporate Partner
2019 will be another year governed by uncertainty and we will start to see increased effects as additional signs signal a potential downturn in the market. We believe the first half of the year will start out strong but as the year progresses activity will be slowed by underlying economic issues. We will continue to see an influx of international buyers that will continue to present a host of regulatory issues. This is particularly true in the life sciences sector where we expect to see an increase in activity as the industry continues to grow at a much faster pace than others.
Joshua Davidson, Houston based Corporate Partner
As we saw several years ago, low energy prices might make for reluctant sellers as they wait for higher prices again. Stock market volatility is not good for deal making either, as it makes it harder to peg values. That said, we do expect further consolidation in the energy industry given the need for efficiencies and deleveraging and the challenges of a maturing shale industry. Also, although most of the obvious MLP simplifications have occurred, there are several more that could occur in 2019 and there is likely to be consolidation among some of the smaller, PE-owned MLPs.
Brian Lee, Palo Alto based Corporate Partner
In a similar fashion to M&A activity, we expect to see an increase in the number of international investors in startups. Traditional VCs will remain strong, but the financial mix will continue to diversify as more high-net-worth individuals get involved and fundraising activities like crowdsourcing increase. We expect valuations to level off in 2019, but as this happens there will be fewer and fewer companies that everyone wants to invest in, resulting in further increased valuations for a lucky few. As valuations level, we will certainly see a number of fire sales and down rounds.
Ed Rhyne, Houston based Corporate Partner
Leveraged buyout funds are holding a record amount of approximately $630 billion in dry powder. In other words, the PE industry is poised for another strong year of investment activity, assuming there is an adequate supply of target companies at manageable valuations. With the abundance of available funds for investments, the standard practice of selling target companies in auctions and the increasing popularity of representation and warranty insurance to minimize the post-closing risks to sellers, it is becoming very difficult for PE firms to differentiate themselves in all-cash M&A transactions. However, the firms with the most experience and expertise in the industries in which their companies operate should be best positioned to achieve their investment objectives, even with companies that are acquired at higher than desired investment valuations.
Larry Hall, Dallas based Corporate Partner
Upstream transaction activity in 2018 was far from robust. If transaction activity picks up in 2019, upstream private equity funds will seek opportunities to monetize or otherwise exit older investments. Larger upstream and midstream private equity funds may focus on fewer management teams with larger capital commitments, in order to pursue sizable property packages/projects and take advantage of scale (both at the fund and portfolio levels), which could open up more opportunities for smaller upstream and midstream private equity funds.
Rachael Lichman, Houston based Corporate Partner, and Erin Hopkins, Houston based Global Projects Partner
The biggest challenges continue to be a choppy market overall and particularly for any company reliant on the oil & gas space. We continue to see consolidation in the midstream space, with more MLP simplifications, and the offshore space. The bank market is still open, but terms are tighter and there is more focus on collateral and other structural enhancements, like priority guarantees. The built-up inertia in upstream exploration and production will continue to drive needed infrastructure improvements/additions in the coming year. Oil price volatility continues to be problematic on asset transactions and unless the price settles we expect a “calmer” asset deal market in 2019. However, this is a perfect time for larger strategic players to acquire assets and infrastructure and we are seeing more activity from the large strategic companies on this front. We also anticipate more public M&A activity as a way for companies to acquire and diversify in lieu of the more typical upstream asset-based transactions.
Deal Description: Dallas-based Zix Corporation (NASDAQ:ZIXI), an industry leader in email security, today announced it has reached an agreement to acquire 100% of the outstanding equity securities of AppRiver, LLC from Marlin Equity Partners, a technology-focused private equity firm, for $275 million in cash.
The transaction will be financed with a $175 million secured term loan to be provided by SunTrust and KeyBanc and a $100 million preferred equity investment in Zix being made by True Wind Capital, a San Francisco private equity firm that invests in the technology sector.
Baker Botts represented long-time client Zix in the M&A transaction as well as in the related debt and preferred equity financing transactions.
Outside Counsel to Zix Corporation: Baker Botts L.L.P.
Financial advisors to Zix Corporation: RBC Capital Markets and Cowen & Co.
Other party(ies): AppRiver, LLC and Marlin Equity Partners (M&A transaction); True Wind Capital (Preferred Equity transaction); SunTrust and KeyBanc (Debt transaction)
Counsel to AppRiver, LLC: Kirkland & Ellis
Financial advisories to AppRiver, LLC: Evercore
Value: $275 million
Baker Botts Lawyers/Office Involved:
Corporate: Don McDermett (Partner, Dallas); Mollie Duckworth (Partner, Austin); Grant Everett (Partner, Dallas); Luke Weedon (Partner, Dallas); Cynthia Cole (Special Counsel, Palo Alto); Jessica Phillips (Associate, Dallas); Ian Lurie (Associate, Dallas); Jennifer Ybarra (Associate, Dallas); Chad Davis (Associate, Houston); Malory Weir (Associate, Houston); Sara Jones (Paralegal, Dallas)
Intellectual Property: Luke Pedersen (Partner, Washington, D.C.): Tyler Beas (Senior Associate, Dallas); Andrew Wilson (Associate, Washington, D.C.)
Tax: Eric Winwood (Partner, Dallas); Steve Marcus (Partner, Dallas); Marian Fielding (Senior Associate, Dallas); Snow Rui (Associate, Dallas)
Litigation: Jennifer Trulock (Partner, Dallas)
Antitrust: Paul Cuomo (Partner, Washington, D.C.); Michael Bodosky (Special Counsel, Washington, D.C.)
The end of coal? Not so fast
Elaine Walsh, Washington, D.C. based Global Projects Partner
While coal’s market share of global energy supply continues to decline because of environmental regulations over the past several years and competition from natural gas and renewables, it still accounts for approximately 14% of energy consumption in the US (eia), 60% of energy consumption in China (CEIC), and over 50% of energy consumption in India (BP Energy Outlook). There are several reasons why coal won’t be going away as fast as one might expect:
Shift in Renewable Energy Development and Energy Storage
Jay Ryan, Washington, D.C. based Global Projects Partner, and Michael Didriksen, New York based Global Projects Partner
With the Renewable Electricity Production Tax Credit (PTC) phasing out in 2019, we expect to see a slow drop-off in onshore wind development. However, off-shore wind appears to be gaining significant traction and we foresee a concurrent rise in solar development before the expiration of the Solar Investment Tax Credit (ITC) in 2021.
FERC Order No. 841, issued in February 2018, directed ISOs and RTOs to develop rules that would enable energy storage resources to participate in wholesale energy, capacity and ancillary services markets. In response to Order No. 841, ISOs and RTOs filed proposed tariff changes with FERC in December 2018 detailing proposed rules for integrating energy storage resources into FERC-regulated markets. The RTO/ISO filings further the momentum behind the deployment of storage resources and we expect to see a number of developments in 2019 including:
National Environmental Policy Act (NEPA)
Emil Barth, Washington, D.C. based Global Projects Special Counsel
We expect to see an increase in cases challenging permit approvals based on NEPA claims that will result in several significant decisions in the next six to eight months. A few key cases to keep an eye on are:
The impact to the energy sector will be tremendous for technologies that include AI, blockchain, and drones. For example, companies can fully automate monitoring of energy locations using AI and tracking to detect patterns, drones to provide live views of events, and blockchain to efficiently store information related to specific areas. With blockchain, the use of smart contracts is going to reduce a lot of processes currently in place for how energy is traded and exchanged. This impact will be felt across all industries, but particularly nuclear and O&G. In nuclear, there is already a push by companies for solutions like the Digital Plan Viewer Map by Chai One that uses AI - and has already garnered praise and awards. However, with these new technologies, a host of new legal issues will be presented regarding ownership of data, IP, and cybersecurity.
Oil Prices and Rising Interest Rates
Ned Crady, Houston based Global Projects Partner
Low oil prices (resulting from prolific shale oil production in the Permian Basin) and a constant refined product demand, incentivize U.S. refiners to increase production (with low cost crude input costs) and sell refined products (gasoline and diesel) at a profit into the US market first and thereafter to developed international markets that do not have the benefit of low cost crude pricing (or at least to the same extent as in the Permian). Rising interest rates may curtail economic growth, reduce refined product demand, and apply downward pricing pressure to refined products. However, ultimately the low-cost producer of refined products will prevail and the material crude oil feedstock cost advantage that US refiners have, support additional production of refined products independent of interest rates.
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