Pfizer’s $160bn merger with Allergan may well be the largest healthcare transaction in history, but at least the in-house team didn’t have to contend with a merger, injunction attempt, simultaneous de-listing and new listing all in one year.
These were exactly the challenges faced by LivaNova’s general counsel Brian Sheridan, whose company was formed following the merger of pharmaceutical companies Sorin and Cyberonics, announced last February.
Former Oppenheimer Wolff & Donnelly partner Sheridan, who joined as Sorin’s head of legal in Milan at the start of 2004, said the parties starting talking years ago, with Cyberonics’ heart failure treatments combining well with Sorin’s focus on cardiac devices.
However, Cyberonics’ US origins and Sorin’s Italian base complicated matters, with the two companies not sharing the same domestic history.
“It was not like we were merging two US companies who knew what hurdles and timetables to expect,” says Sheridan. “We were merging a non-Anglo company with an American one, which can be unfamiliar, especially as each jurisdiction has different labour laws that you have to respect and be familiar with.”
Cue an external legal team that would know how to act on cross-border and legally complicated mergers. While at Sorin, Sheridan says he interviewed all the “classic firms” but landed on Latham & Watkins partner Luke Bergstrom who led the team from Silicon Valley. Partners involved in the transaction were based across the world in London, Italy, France and New York, with the decision made to run the external legal team from San Francisco “in order to gain rather than lose a day”.
Latham & Watkins worked with Sorin’s in-house legal team, in particular corporate legal affairs director Megan Menagh who handled M&A negotiations along with Sheridan. Menagh joined Sorin in Denver back in 2010 as a litigator, but has since converted to the corporate side and moved to Milan.
“Litigators make good M&A lawyers, as they have good attention to detail and look to the future,” explains Sheridan. “This was a merger of equals and litigators are able to make it dispute free.”
Nevertheless the merger did result in a dispute from the Italian state’s attorney, as the state sued for an injunction to the deal. Here, Latham worked with Gianni Origoni Grippo Cappelli & Partners partner Rosario Zaccà, as Italy claimed it was a creditor in the transaction, arguing the deal was intended to insulate Sorin from liability related to pending environmental litigation against its previous parent SNIA.
“Pleadings were filed in the middle of the summer holidays,” recollects Sheridan. “But we argued that Italy was not a creditor and said its argument was factually unfounded on the basis of free movement in the free market.”
On the other side, Sullivan & Cromwell New York partners Matt Hurd and Krishna Veeraraghavan acted alongside Cyberonics’ GC Darren Alch, who now leads one of the IP portfolios at LivaNova. Legance partner Alberto Giampieri meanwhile was Cyberonics’ Italian legal adviser.
With an external and internal legal team in place across Italy, Europe and the US, negotiations were held in which Sorin was delisted from the Borsa Italiana (Italy’s stock exchange) and Cyberonics was taken off the NASDAQ stock market. The companies were then merged to create LivaNova, to be listed back onto the NASDAQ as well as the London Stock Exchange (LSE).
“We delisted from the Borsa Italiana to reflect what’s happening in the life sciences sphere,” Sheridan explains. “Medical devices is typically an Anglo-Saxon industry and most of our competitors are in the US and the UK. We want to be a global multinational company.”
Sheridan adds that the two standalone listings also ensure access to two sets of shareholders, with Europeans only wanting to invest in UK stock and the US only wishing to invest in US ones. He goes on to say that the two regulatory bodies, namely the US Securities and Exchange Commission and LSE, demonstrate confidence and stability in the business, which satisfied both companies.
Although LivaNova does not have a formal panel, its general counsel Sheridan praises the external legal teams for being “fleet of foot and creative” despite the challenges. The next stage of the newly-created company is the move of its global corporate headquarters to London, which will see Sheridan relocate from Milan to the City after months of travelling between US, Italy and the UK.