Merrill, Heller Ehrman advise Foundry in Brocade deal

In early 1999, Merrill Lynch & Co. technology banker Gary Kirkham moved from his native Canada to Palo Alto, Calif., to be closer to his data networking clients. Upon arrival, he set about building the firm's relationship with Foundry Networks Inc., which Merrill helped to take public that same year (Kirkham did not work on that deal), and maintaining a steady dialogue with Foundry CEO Bobby Johnson Jr.

Though Santa Clara, Calif.-based Foundry did little dealmaking over the next few years, Kirkham's efforts have paid off. In July, Foundry announced plans to be acquired by Brocade Communications Systems Inc., a major networking gear maker in San Jose, Calif., for $3 billion in cash and debt. Merrill advised Foundry in the deal, with Kirkham, who heads Merrill's communications equipment investment banking group, leading a Palo Alto-based team including Jack MacDonald and director David King.

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Merrill was brought into the deal earlier this year after merger talks between Johnson and Brocade CEO Mike Klayko started to get serious. Klayko had first proposed a deal in late 2007, but Johnson said no. But Brocade, which bought McData Corp. for $713 million in 2006, persevered.

For legal advice, Foundry turned to Heller Ehrman LLP's shareholders Steve Tonsfeldt, Kristen Kercher, Mark Windfeld-Hansen, Richard Grimm and special counsel Stuart Pixley. Although Foundry recently began using Wilson Sonsini Goodrich & Rosati PC as its outside legal counsel, the company hired Heller Ehrman for the Brocade deal because of conflict of interest. Wilson Sonsini has previously represented Brocade, including on the McData deal.

Brocade received financial advice from Banc of America Securities LLC's Sean Rogers and Georg Schloendorff, managing directors in the firm's tech investment banking group, who joined BofA in 2004 from Citigroup Inc. BofA, along with Morgan Stanley Senior Funding Inc., is financing the deal. Morgan advised Brocade in its $113 million acquisition of Rhapsody Networks Inc. in 2002 and in the McData deal four years later.

Brocade turned to Cooley Godward Kronish LLP's M&A head Rick Climan and partner Jane Ross for legal advice. Cooley Godward has done litigation work for Brocade in the past.

Foundry Networks CFO Daniel Fairfax and corporate development vice president Tim Heffner along with Brocade CFO Richard Deranleau and vice president of corporate development T.J. Grewal were also frontline players in the deal's discussions.

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