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Sometimes, international conflict interferes with a Silicon Valley lawyer’s job. Latham & Watkins partner Alan Mendelson was preparing for a trip to Israel for one longtime client about to go public. Mellanox Technologies, which provides semiconductor products used in transmitting data between servers and storage systems, had its design center in the Northern Israeli town of Yokneam, while its business staff was in Santa Clara. With an IPO on the company’s to-do list, Mendelson needed to walk through the Yokneam facility. When war broke out with Lebanon last year, Mendelson’s trip was cancelled, but the IPO had to press forward. The Latham team, comprised of partner Mark Roeder and associates Sean Edgett and Kathleen Wells, ended up finishing due diligence long-distance, mostly by telephone. “Clearly, everyone would have liked to have seen the facility and the people there, and certainly some of the officers of the company had come to the U.S.A.,” Mendelson said. But it would have been nice to have set foot on company property in person. “It’s a little more awkward, but you schedule calls and you probe management,” and the company’s CFO and CEO both made trips to the Bay Area. Another aspect that made the deal stand out, Mendelson said, was the shifting timing of the IPO. The intent had been to wrap it up at the end of 2006 to avoid potential market risks and cumbersome updates to company financials � all of which could delay the company offering. But, Mendelson said, Mellanox management was cautious about market conditions in the semiconductor industry and questioned the market’s receptivity to IPOs. “Mellanox didn’t need the [IPO] money,” he said. “It’s making money� They hesitated a few weeks and those few weeks pushed the offer into 2007.” With that decision, added complications arose. Going public in the new year meant dealing with a fresh SEC rule governing officer compensation in light of perceived excesses in executive pay � i.e., more work for the Latham team. Another wrinkle: needing fourth-quarter financials before the company had finished its year-end audit. Mendelson said attorneys did a fair amount of research into “top-line disclosure” and had to negotiate with the SEC to be able to give some kind of overview of fourth-quarter results before the year-end audit was done. The delay turned out to be a good thing, Mendelson said. Bankers originally estimated that Mellanox shares were each worth between $12 and $14. When an improving environment promised a higher offering, Mendelson said, the company filed an amended registration statement, boosting per share value to between $14 and $16. Mellanox announced the pricing of its offering of 6 million shares at a price to the public of $17 per share, and in the end, with the underwriters exercising their option to oversell to meet demand, the IPO was worth $117 million, beating everyone’s expectations. Representing the underwriters (Credit Suisse Securities, J.P. Morgan Securities, Thomas Weisel Partners and Jeffries & Co.) was a Morrison & Foerster team led by senior partner Bruce Mann, and associates Andrew Thorpe and Theresa Ng.

Petra Pasternak

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