S&C, Debevoise pilot AT&T's merger of WarnerMedia, Discovery

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Signage is seen outside the law firm of Sullivan & Cromwell in Manhattan, New York, U.S., September 17, 2020. REUTERS/Andrew Kelly

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  • Five firms, including Sullivan & Cromwell, advising on merger
  • Brings Sullivan's 2021 M&A deal count to 86
  • Brings Debevoise's M&A deal count to 36

(Reuters) - A quintet of law firms, including Sullivan & Cromwell and Debevoise & Plimpton, is guiding AT&T Inc’s $43 billion deal to spin off its WarnerMedia unit and merge it with reality TV company Discovery Inc.

The transaction, announced on Monday, would result in the marriage of the studios behind the Harry Potter and Batman franchises with the makers of reality shows like “90 Day Fiancé." The combined enterprise would be one of the largest global streaming companies.

Sullivan & Cromwell is steering longtime client AT&T on the transaction with a team that includes corporate partners Eric Krautheimer and Melissa Sawyer and special counsel Matthew Barnett.

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Sullivan & Cromwell has been an M&A heavyweight this year. Since January, the firm has guided 86 deals, valued at $219.2 billion including debt collectively, according to data from Refinitiv.

Only Latham & Watkins and Skadden, Arps, Slate, Meagher & Flom rank above Sullivan & Cromwell based on combined deal value.

As recently as February, Sullivan helped AT&T secure a $14.7 billion loan facility from a group of banks.

The firm previously advised AT&T on its $85.4 billion acquisition of Time Warner Inc. Krautheimer, who also worked on that deal, has played a pivotal role in the firm’s relationship with the telecommunications company. He led the team that guided the company's sale of its minority stake in streaming platform Hulu LLC for $1.43 billion in 2019.

The firm also advised AT&T on its failed 2011 attempt to purchase T-Mobile for $39 billion, according to press releases.

On the other side of the deal, a Debevoise & Plimpton team led by M&A partners Jonathan Levitsky, Sue Meng and Jeffrey Rosen is advising Discovery.

The firm represented Discovery in its $195 million purchase of a minority stake in Lions Gate Entertainment Corp in 2015. Debevoise also teamed up with Discovery when the media company acquired Scripps Networks Interactive Inc in a $14.6 billion deal in 2018. Levitsky took the lead on both the stake buy and acquisition, according to firm press releases.

Since the start of 2021, Debevoise has advised on 36 M&A transactions worth a combined $60.7 billion including debt, according to Refinitiv.

A Proskauer team is also advising Discovery, led by corporate partner Rob Freeman.

Wachtell, Lipton, Rosen & Katz is guiding the independent transaction committee from Discovery’s board of directors. The Wachtell Lipton team is led by corporate partners Andrew Nussbaum and Karessa Cain and litigation partner Theodore Mirvis.

A Paul, Weiss, Rifkind, Wharton & Garrison team including M&A partners Robert Schumer, Ariel Deckelbaum, Cullen Sinclair and associate Kristiina Leskinen is guiding major Discovery shareholder Advance.

AT&T’s financial advisers are LionTree and Goldman Sachs Co.; Discovery’s are Allen & Co and J.P. Morgan Securities. Advance’s financial advisers are RBC Capital Markets. The Discovery independent transaction committee is being advised by Perella Weinberg Partners.

The deal is expected to close in mid-2022.

Read more: AT&T to exit media in $43 bln deal with Discovery AT&T closes $85 billion deal for Time Warner

(NOTE: This story has been updated to add that Proskauer is also advising Discovery.)

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Sierra Jackson reports on legal matters in major mergers and acquisitions, including deal work, litigation and regulatory changes.