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Shearman & Sterling guided China’s largest chip maker, Semiconductor Manufacturing International Corp., through an IPO that raised $1.8 billion last week. The share offer is reportedly the third largest in the world so far this year, behind IPOs from Japan’s Shinsei Bank and U.S. insurer Assurant Inc. “A lot of capital market transactions in Asia, in China in particular, have been privatizations. This is sort of the next step of a private company � moving away from the state-owned enterprise-type model,” said partner James Bucher, who led Shearman’s team with partner Carmen Chang. “It’s something people are going to start seeing a lot more of.” SMI sold roughly 55.5 million American depository shares at $17.50 per share, the equivalent of $2.73 Hong Kong dollars per ordinary share, according to the company’s prospectus. (An ADS is the equivalent of 50 ordinary shares.) A group of selling shareholders increased the offering by 13 percent. SMI, the first Chinese chip manufacturer listed outside China, began trading on the New York Stock Exchange Wednesday. Due to coordination arising from the dual listing on the Hong Kong Stock Exchange, the Shanghai-based company’s shares will begin trading today. “It’s been a great transaction. It really points up the strength of our global franchise,” Bucher said, adding praise for Chang. “She brings the experience from the Silicon Valley side and from the relationship side in China.” SMI, a 4-year-old company registered in the Cayman Islands, has three fabrication plants that produce custom-made integrated circuits. Customers include semiconductor big leaguers Toshiba Corp. and Infineon Technologies AG. Due to the current global demand for new China equity issues, investors have set aside SMI’s potential pitfalls in favor of potential growth. “By all accounts, people expect China’s semiconductor market to grow. Given that it’s China, there’s probably a lot of potential for growth,” Bucher said. Among the “risk factors” listed in the company’s prospectus are concerns over an impending drop in demand due to “the cyclical nature of the semiconductor industry,” a need for additional capital to finance operations, and an intellectual property lawsuit brought by rival Taiwan Semiconductor Manufacturing Co. last year. In addition to Bucher and Chang, Shearman’s team included associates Alan Seem in Hong Kong, Mark Hyland and Brad Kern in San Francisco and Isamu Watson in Tokyo. Menlo Park-based associates Brent Irvin, Eva Wang and Su Ping Lu rounded out the team. Skadden, Arps, Slate, Meagher & Flom represented SMI’s underwriters, including Credit Suisse First Boston and Deutsche Bank Securities Inc. — Adrienne Sanders GE GRABS BOMB-DETECTION FIRM — AND GOVERNMENT CONTRACT Cooley Godward attorneys delivered InVision Technologies Inc. to a unit of General Electric Co. in a $900 million deal. The all-cash transaction, which is subject to regulatory and shareholder approval, gives GE Infrastructure one of the leading players in the homeland security industry. InVision is one of only two companies whose airport baggage bomb screening devices have been approved by the federal government. Under the terms of the deal, GE will pay $50 per outstanding share of InVision. Cooley took InVision public almost a decade ago, and has represented the Newark-based company in much of the government contract work it has garnered in the wake of the Sept. 11 terrorist attacks. Keith Flaum, a partner in Cooley’s Palo Alto office, led the InVision team. InVision’s grim line of business meant that two standard contract clauses for material adverse change — acts of terrorism and acts of war — weren’t as important as in most merger negotiations. “It’s unfortunate but you sort of worry about those types of things less because of the industry,” said Flaum. For Flaum, it was the first time sitting across the table from GE, one of the world’s largest companies. GE was represented by Weil, Gotshal & MangeS’ New York office as well as a couple of in-house lawyers. “While the negotiations were intense, they were very friendly and reasonable, which isn’t always the case when dealing with the 800-pound gorilla,” said Flaum. Flaum was assisted by corporate partner Robert Jones and associates Kathryn Hall, Brian Quinn and Keith Bauman, as well as antitrust partner John Young and associate Francis Fryscak, and tax and benefits partner Robert “Buff” Miller. InVision’s legal department also worked on the deal. — Alexei Oreskovic DEUTSCHE TREAT Mark Twain would have nodded his head in sympathy if he’d seen lawyers at Farella Braun & Martel help a Canadian client acquire a German software company. As Twain famously unraveled the intricacies of the German language — he wrote a piece called “The Awful German Language” — Farella’s lawyers had to figure out the regulations covering takeovers in Germany. “The core issue was how to mesh the requirements of U.S. law with the requirements of German law,” said Farella partner Matthew Lewis, who served as special U.S. securities counsel to Open Text Corp. in its acquisition of 88 percent of IXOS Software AG. Open Text offered to buy 100 percent of the 21.5 million outstanding shares of IXOS for up to 194 million euros in cash or a combination of Open Text common shares and warrants. Eighty-eight percent of IXOS shares were tendered at a cash value of $180 million euro, or about $221 million in U.S. currency. Based in Waterloo, Ontario, Open Text develops software used to search corporate intranets and manage documents. IXOS, which is based in Grasbrunn, Germany, develops business document management software. Lewis said that since both companies are publicly traded on Nasdaq, they are subject to United States as well as German regulation. The disclosure and timing requirements in the United States “didn’t line up with those of Germany,” Lewis said. And there were various questions that had to be answered, such as the number of shareholders involved in the transaction. “Rules in the United States make things easier if there are a smaller number of shareholders,” he said. “It’s hard to tell how many shareholders there are in a German company since it has one stock certificate.” The Farella Braun team also included partner Bruce Deming and associates Jack Martel, David Stoll, Mandy Tachiki and Alison Nameth. Lawyers at Freshfields Bruckhaus Deringer’s Frankfurt office represented IXOS. — Brenda Sandburg

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