Davis Polk misses out as Oracle M&A work goes way of Latham

Latham & Watkins edged out Oracle’s longstanding primary M&A adviser Davis Polk & Wardwell last month to secure its first lead acquisition mandate for the technology giant.

A team led by partners John Newell in San Francisco and Paul Tosetti in Los Angeles are advising Oracle on its $8.5bn (£4.34bn) acquisition of enterprise infrastructure software provider BEA Systems.

The deal, which is expected to close by mid-2008, will see Oracle acquire all of BEA’s outstanding shares for $19.375 (£9.89) per share in cash. Oracle CEO Larry Ellison says in a statement that the deal would “significantly enhance and extend Oracle’s Fusion middleware software suite”.

BEA chairman and CEO Alfred Chuang says the business had spent the past few months reviewing methods of maximising stockholder value “with the assistance of independent financial and legal advisers”.

He adds: “This transaction is the culmination of that diligent and thoughtful process and we believe it’s in the best interests of our shareholders.”

Latham capitalised on the goodwill built up by its competition team’s track record in advising Oracle in recent years to pick up the heavyweight deal. The team advised it on antitrust issues related to Oracle’s protracted $10.3bn (£5.26bn) acquisition of PeopleSoft in 2004. It has provided competition advice ever since, but this is the firm’s first major M&A instruction.

Davis Polk partner and Silicon Valley legend Bill Kelly, who advised Oracle on its eventual successful bid for PeopleSoft, says of the BEA deal: “You do some, you don’t do others. We continue to be very actively engaged with [Oracle].”

Not surprisingly, the mood at Latham was a little more bullish. One partner, who prefers not to be named and who was not involved in the BEA deal, says he believes the firm is at least now in a position to compete on equal terms for future deals.

“We don’t want to get ahead of ourselves, but I think we’ve proven ourselves,” he says.

Oracle, a serial acquirer, has made around 40 significant acquisitions over the past five years. As the Latham partner adds: “The next one they go outside for is up for grabs, whereas in the past it wasn’t.”

The only rain on Latham’s parade in winning the Oracle work is the fact that the general counsel who appointed the firm for the BEA deal, Dan Cooperman, moved on to become general counsel at Apple last year. Oracle stalwart Dorian Daly has since take over as general counsel.

“We’re all wondering and speculating what the effect will be,” says the Latham partner. “The test is the next deal, not this deal.”

BEA turned to Wachtell Lipton Rosen & Katz for the deal, with a team led by partners Andy Brownstein and Dan Neff.