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January 5, 2011 12:42 PM

Cravath, Pillsbury on Atheros Sale to Qualcomm

Posted by Tom Huddleston Jr.

Only a few weeks after selling off nearly $2 billion worth of mobile broadband spectrum licenses to AT&T, Qualcomm Incorporated is looking to put its capital to use.

The San Diego-based tech company on Wednesday announced what the New York Times describes as its largest ever acquisition: a $3.1 billion deal to buy Santa Clara, Calif.-based chip producer Atheros Communications, Inc. The deal, which will see Qualcomm pay $45 per share for Atheros, will enable the company to move beyond cellphone production and expand into smartphone and tablet territory, according to the company's release.

The deal is the tech industry's biggest since Intel's $7.7 billion purchase of McAfee, Inc., in August. That deal kicked off a spending spree for Intel that included a $1.4 billion pickup of Infineon later that month, as The Am Law Daily reported this summer.

Reports that the deal was imminent in The New York Times on Tuesday afternoon gave Atheros shares a boost, as they finished the day up by nearly 19 percent to $44. The terms of the deal mark a 29 percent premium over Atheros's average closing price from the past month. The NYT also noted that Qualcomm was flush with more than $18 billion in cash in the quarter ending on September 26. 

Representing Qualcomm on the deal was Cravath, Swaine & Moore. Cravath's deal team was led by New York-based corporate partners Scott Barshay and Damien Zoubek, while compensation and benefits partner Eric Hilfers and tax partner Stephen Gordon also advised. The firm has a long history with Qualcomm: Presiding partner Evan Chesler represented the company in its multiyear litigation over a licensing agreement with Nokia. That case settled in 2008. And, as The Am Law Daily recently reported, Chesler also represented the company in sanctions proceedings related to the Qualcomm-Broadcom patent battle.

Qualcomm's general counsel is Donald Rosenberg.

On the other side, longtime counsel Pillsbury Winthrop Shaw Pittman advised Atheros, with Silicon Valley corporate partners Jorge del Calvo and Allison Leopold-Tilley taking the lead. A firm spokesperson confirmed that Pillsbury has represented Atheros since its inception, including on its $144.9 million public offering in 2004. Adam Tachner is Atheros's general counsel.

The deal, which still is subject to standard regulatory and shareholder approval, is expected to close in the first half of 2011; Qualcomm expects a modest impact on earnings per share in 2012. 

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