Sep. 13, 2012
Charles K. Ruck
See more on Charles K. RuckLatham & Watkins LLP Costa Mesa Corporate Specialty: mergers and acquisitions
Ruck had quite a ride while guiding Watson Pharmaceuticals Inc. in its planned $5.9 billion acquisition of Actavis Group.
The combination of New Jersey-based Watson with Swiss drug maker Actavis would create the world's third largest generic pharmaceutical company.
"There were so many twists and turns and overlays to it," Ruck said.
Those included a blend of governments, politics, financial crises and clashing egos, he added.
Actavis was originally based in Iceland, then taken private by United Kingdom-based Novator Partners LLP in 2007 for a reported $5 billion, plus the assumption of an additional $3 billion of debt.
Icelandic banks, private equity sources and the mighty Deutsche Bank all lent billions of euros to finance the transaction.
Then in 2008, the financial ceiling caved in.
"The first problem was that the Deutsche Bank wanted to syndicate the debt and sell to others, and they were stuck with the whole thing," Ruck said. "Actavis was Deutsche Bank's single largest asset."
That meant one of the largest institutional global banks now had a "big black mark" on its balance sheet, Ruck said.
Then in 2009, Iceland's economy and banking system imploded.
"We were dealing with receivers and bankruptcy trustees representing the banks," Ruck said.
The deal didn't proceed along conventional lines.
"What made it so amazing is that nobody had the normal incentives that people typically do in transactions - 'How much do you want, and how fast can you close?'" he said. "In this case, there were so many political overtones and different actors with their own agendas, it was not as clear-cut."
On top of all that, Ruck had to contend with antitrust issues, because both companies had products in competition.
"It's like dealing with the U.S. FDA in 30 different countries," said Ruck, who is in the process of negotiating with the antitrust regulators in various jurisdictions, as well as arranging the financing.
Basically, he said, getting the deal done came down to being able to "read the tea leaves and understand what would motivate the players to find a compromise."
After all the smoke clears, he said, "We hope to close the deal at the end of the year or early next year."
Ruck also is representing Medicis Pharmaceutical Corp. in its $2.6 billion acquisition by Valeant Pharmaceuticals International Inc. in a deal expected to close in the first half of 2013.
- PAT BRODERICK
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