Latham, Skadden Lead on $6.6 Billion Microchip Merger
Longtime M&A rivals Latham & Watkins and Skadden, Arps, Slate, Meagher & Flom are on opposite sides of the proposed $6.6 billion merger announced Monday between microchip makers Avago Technologies Ltd. and LSI Corp.
Avago, which is based in Singapore and San Jose, announced that it is funding its acquisition of LSI with $1 billion of its own cash, another $1 billion through an investment by former private equity owner Silver Lake Partners and a $4.6 billion loan from a group of banks led by Deutsche Bank Securities.
A Silicon Valley–based team of Latham lawyers led by corporate partners Christopher “Kit” Kaufman, Luke Bergstrom and Anthony Richmond are advising Avago on the transaction, which has been approved by the boards of both companies and should be completed by the first half of next year, pending the additional approval of shareholders and certain regulators.
Avago’s merger with LSI is the second-largest acquisition in the semiconductor sector this year after Applied Materials’ proposed $9.4 billion buy of Tokyo Electron. That deal, a tie-up valued at $29 billion announced in August that has yielded key roles for a half-dozen firms, is currently the subject of a U.S. Department of Justice antitrust review.
Latham’s Kaufman took the lead for underwriters on a $250 million initial public offering announced in September for SunEdison Semiconductor, a spin-off from solar power firm SunEdison, formerly known as MEMC Electronic Materials. Atomic clock equipment maker Symmetricom also turned to Latham for counsel in October on its $230 million sale to microchip maker Microsemi, a deal the Federal Trade Commission approved last month.
Kaufman and Richmond advised the firm’s current client, Avago, on a $648 million IPO in 2009, which a Securities and Exchange Commission filing by the company at the time shows generated $1.5 million in legal fees and expenses. Avago was the former electronics division of technology giant Hewlett-Packard until 1999, when it was spun off as a unit of Agilent Technologies in a landmark $2.1 billion IPO.
Silver Lake and private equity rival KKR then paid roughly $2.7 billion in 2005 to carve Agavo out of Agilent. Latham picked up a lead role representing the private equity buyers on that transaction, according to a report at the time by sibling publication The Recorder. (The New York Times’ DealBook reports that Menlo Park, Calif.–based Silver Lake—whose in-house legal department is led by Karen King, Andrew Schader and David Smolen—is now poised to reap the benefits from another investment in Avago.)
Patricia McCall, a former partner at a predecessor firm of Pillsbury Winthrop Shaw Pittman, currently serves as general counsel of Avago. The company is seeking to buy storage chip specialist LSI in order to bolster its cloud storage and mobile software businesses, according to various news reports.
San Jose–based LSI has turned to Skadden corporate partner Amr Razzak for counsel on its proposed sale to Avago. Skadden previously advised Agere Systems on its $4 billion merger with LSI back in early 2007.
Other Skadden lawyers advising LSI on its current deal with Avago include IP and technology partner David Hansen, tax partner Sean Shinamoto, antitrust partners Alec Chang and Frederic Depoortere, antitrust counsel Rita Sinkfield, IP and technology counsel Carrie LeRoy, employee benefits counsel Alessandra Murata, environmental counsel Jane Kroesche, labor counsel Lisa D’Avolio and associates Joseph Halloum, Trevor Katende, Marat Massen and Sonia Nijjar.
Jean Rankin serves as general counsel for LSI, which tapped Wilson Sonsini Goodrich & Rosati for counsel two years ago on its $370 million acquisition of flash storage processor SandForce. The latter company, which was advised by Kaye Scholer on its sale, is now LSI’s flash components division.
Steve Camahort, a deputy practice leader of Shearman & Sterling's global M&A group in San Francisco, is advising technology-focused investment bank Qatalyst Partners, which is serving as financial adviser to LSI on its proposed sale to Agavo. Other Shearman lawyers counseling Qatalyst include finance partner Maura O'Sullivan and associate Lisa Lopshire.
Deutsche Bank Securities, which is acting as a financial adviser to Avago, is being advised by Davis Polk & Wardwell corporate partner Mischa Travers and associate Siyu Jiang in Menlo Park.