January 7, 2011 6:00 AM
Dealmaker of the Week: Damien Zoubek of Cravath, Swaine & Moore
Posted by Tom Huddleston Jr.
Damien Zoubek, corporate partner in the New York office of Cravath, Swaine & Moore.
San Diego-based cellphone technology company Qualcomm Incorporated made its largest acquisition ever: a $3.1 billion purchase of chip producer Atheros Communications, Inc., announced on Wednesday.
Qualcomm Incorporated--a provider of wireless technology to global telecommunications carriers and manufacturers.
The New York Times first reported on Tuesday afternoon that a deal between Qualcomm and Atheros was imminent. The rumors sent Atheros's shares soaring by almost 19 percent to $44. By late Tuesday night, a Cravath team led by Zoubek had a finalized deal in place with a $3.1 billion price tag (or $45 per share)-- that represented a 29 percent premium over Atheros's average closing price from the past month.
The deal is expected to close in the first half of 2011, pending regulatory and shareholder approval.
THE BIG PICTURE
The NYT noted that Qualcomm was sitting on roughly $18 billion in cash in the quarter ending on September 26, and a recent sale of mobile broadband spectrum licenses to AT&T in December brought in nearly $2 billion. Qualcomm's chairman and CEO, Dr. Paul Jacobs, made it clear in his statement that the company is looking to expand production of technology for mobile devices. According to The New York TImes, the company wants to "expand beyond its core market of providing chips for wireless voice technology and move more aggressively into making chips for smartphones and tablets."
THE BACK STORY
Cravath has represented Qualcomm on a number of past litigation matters, including a Nokia licensing agreement lawsuit and the recent Broadcom patent dispute. Until now, though, the firm had yet to advise Qualcomm on a corporate transaction, and Zoubek had never worked with the company before. Cravath's Scott Barshay--a "good friend and colleague" to Zoubek since Zoubek joined the firm in 1999--is the principal relationship partner for Qualcomm in the firm's corporate practice. Zoubek says Barshay approached him about working on the deal. "Next thing you know," he says, "I was kind of running the thing."
Though Zoubek has closed many M&A deals, both large and small, throughout his 12-year career, working on Qualcomm's largest-ever acquisition as the kickoff to establishing a relationship with the company was exciting. "This was the first time we had done a deal of any size together," he says, "so that, to me, was interesting."
"Leaks have the potential, in any deal, to really screw things up," Zoubek says. Luckily, the reports on this pending deal didn't put a kink in the negotiations. "In this particular circumstance...it didn't really alter the strategy and both sides kept pressing forward and still reached the goal line," Zoubek says.
What did pose a challenge was the calendar. Closing a deal in the first week of January requires working right through the holidays, Zoubek says. So, at a time when he and the others on his team would normally take a breather to spend time at home with family, the Qualcomm legal team had to hunker down and wrap up the transaction.
"Having to work through the holidays is never fun," he says, "but when you get to announce a deal and start off the year like this, it makes it all worth it."
Update, 1/7/11, 11:25 a.m. - The seventh paragraph of this post has been updated to reflect Scott Barshay's status as the principal relationship partner for Qualcomm within Cravath's corporate practice.Make a comment