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Monday, December 10, 2007

The Expert Testimony of Peter R. Ehrenberg

Cerberus has filed with the court the affidavit of Peter R. Ehrenberg, a well-respected M&A attorney at Lowenstein & Sandler and senior counsel to Cerberus on the URI deal. The purpose of Mr. Ehrenberg's affidavit is to provide Cerberus's narrative of the history of the negotiation of the merger agreement.  One of the interesting things is that nowhere does Gary Horowitz, the Simpson partner on the deal, make an appearance. Not even on a telephone call -- he is missing in action.  Instead, Mr. Ehrenberg states that the main attorney on the deal was Eric Swedenburg, and Mr. Swedenburg negotiated the merger agreement on behalf of URI.  At the time he allegedly single-handedly negotiated the deal, Swedenburg was a senior associate at Simpson (NB. coincidentally? Swedenburg made partner just last week -- mazel tov -- he is also one of the authors of the Simpson memo John C. Coates referred to in his testimony). I honestly don't know what to make of this and will wait until URI's factual response to comment. But, perhaps Cerberus is attempting to set up an argument that an inexperienced, over-their-head associate (fortuitously now partner?) at Simpson made a mistake and URI can't now cover for it.  We'll see, but I feel bad for the situation Swedenburg is now in -- he may be a rock star there and this is a bit unfair to him in cosmic justice sort of way (i.e., think of all the times you as a senior associate were left to finish the deal  -- there but for the grace of . . . .).  Expect an affidavit from Horowitz saying he was the man behind the curtain -- puppeteering from behind the scenes. 

Otherwise, the affidavit puts forth a good explanation and provides strong support for Cerberus's case; something I had yet to see. In particular, Mr. Ehrenberg claims Simpson specifically attempted to delete the phrase "equitable remedies" from the last clause of Section 8.2(e), but that this request was rejected by Mr. Ehrenberg and the phrase remained. Again, this is only one side of the argument and presumably URI/Simpson will argue that this has nothing to do with whether Section 8.2(e) was only triggered upon termination. Nonetheless, I now understand why Simpson is arguing the more complicated argument that section 8.2(e) only applies to termination rather than the simpler one that the specific performance clause must have meaning. Cerberus has a good counterargument in that circumstance that it was specifically negotiated away. Ultimately, we still need to see URI's side of the story, but their case just got more complicated. 

Addendum:  Here are the affidavits of two other Lowenstein lawyers on the deal -- the associates who took the notes.  Again, no appearance by Horowitz -- Swedenburg is the primary lawyer.  They add more support to Ehrenberg's points but again leave open for URI to argue that they were talking about only in the event of termination, etc.  I'm increasingly puzzled by what URI actually thought they negotiated and what the parol evidence is revealing. 

http://lawprofessors.typepad.com/mergers/2007/12/the-expert-test.html

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