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April 20, 2009 4:04 PM

Latham, Wilson Sonsini on Oracle's $7.4 Billion Acquisition of Sun

Posted by Julie Triedman

Oracle Corporation will acquire Sun Microsystems at a cost of $5.6 billion in cash and debt in a deal announced early Monday. The definitive agreement was reached a little over two weeks after talks between IBM and Sun ended in a disagreement over price.

Oracle turned to Latham & Watkins's San Francisco corporate chair John Newell on the deal. Newell was assisted by partners Daniel Wall, Karen Silverman, Joseph Yaffe, Laurence Stein, and associate Michelle Bushore. Oracle also tapped Sean Belanga and Ed Nortrup at the Boston-based IP M&A boutique GTC Law Group.

The deal is Newell's second for Oracle. In January 2008, he represented Oracle in its $8.5 billion acquisition of rival software company BEA Systems Inc. (Oracle had previously relied on Davis Polk & Wardwell M&A partner William Kelly on a handful of its bigger and more complex deals, including its $10 billion bid for PeopleSoft and its 2006 purchase of Siebel Systems Inc. for $5.85 billion.)

Oracle didn't choose Latham out of thin air, according to The Recorder, an Am Law Daily sibling publication. In 2004, San Francisco antitrust partner Daniel Wall, who assisted Newell on the current deal, helped Oracle beat back a significant antitrust challenge by the U.S. Department of Justice following the PeopleSoft takeover battle. That was the firm's entree.

It's a good time to be handling transactional work for Oracle. The Redwood Shores, California-based database maker has been on a deal streak this past year with a strategy to buy and sell a broad palette of products, as BusinessWeek recently noted. Last month, Oracle agreed to buy Relsys, Inc., a software developer for the health sciences industry, for an undisclosed sum. In January it announced it would buy mValent Inc., a developer of application management software. Last year, it acquired eleven companies, including BEA Systems.

Oracle stepped in to acquire Sun shortly after the latter's negotiations with IBM broke down. It will pay $9.50 a share, a slight increase on the $9.40/share offered by IBM. A merger between IBM and Sun would have given the combined company a 50-percent market share in the network storage systems market. But the tie-up was complicated by antitrust and IP concerns. Sources told The Am Law Daily that IBM ran the risk of taking on substantial liability related to patent litigation disputes between Sun and NetApp.

Sun was advised by Wilson Sonsini Goodrich & Rosati. The team was led by partners Martin Korman and Larry Sonsini and included partners Todd Cleary and Scott Sher. The Santa Clara, California-based computer systems maker has relied on Wilson Sonsini in the past. In 2005, the firm represented Sun in its $4.1 billion acquisition of Storage Technology Corp..

Monday's announced deal could make Oracle an even "more formidable competitor in the lucrative market for corporate computing, especially against IBM," according to The New York Times. And analysts also say the deal could be a "game changer" for the fragmented IT and storage market, shepherding in more industry consolidation and bringing renewed attention to other Oracle competitors, such as Cisco Systems.

Additional Reading

Oracle Said to Pounce on Sun After IBM Negotiations Collapsed
Bloomberg

What Oracle Sees In Sun
BusinessWeek

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