Quattrone rises as tech bidding war escalates

NEW YORK Fri Aug 27, 2010 6:44pm EDT

Frank Quattrone leaves the Federal Court in New York in this September 8, 2004 file photo. REUTERS/Chip East/Files

Frank Quattrone leaves the Federal Court in New York in this September 8, 2004 file photo.

Credit: Reuters/Chip East/Files

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NEW YORK (Reuters) - It's beginning to feel a lot like the 1990s -- at least as far as technology mergers and acquisitions are concerned.

You have headline-grabbing takeovers such as Intel Corp-McAfee Inc (INTC.O)MFE.N, ambitious Internet IPOs such as Skype and, of course, there's the amazing comeback of Frank Quattrone.

A superstar investment banker in the 1990s, Quattrone led some of the biggest tech initial public offerings of the era, including Amazon.com Inc (AMZN.O) and Cisco Systems Inc (CSCO.O). His time at the top of the tech banking world, however, was short-circuited by charges he blocked an investigation into IPO kickbacks.

If there were any questions about whether Quattrone, 54, could successfully return to the frontline of investment banking after his five-year legal fight, they have been put to rest by his role in advising 3PAR Inc (PAR.N).

A once obscure data storage firm, 3PAR is now at the center of a $2 billion bidding war between powerhouses Hewlett-Packard Co (HPQ.N) and Dell Inc DELL.O.

Quattrone has helped bring in bids that started at $18 a share last week, then rapidly progressed to $30 a share, a stunning three times 3PAR's share price before the war began.

Bidding wars are extremely rare in the technology sector. The last notable one was when EMC Corp (EMC.N) outbid NetApp Inc (NTAP.O) last year to buy Data Domain for $2.4 billion.

Data Domain's adviser? Frank Quattrone.

"Frank is a tech guy. His passion is tech. So I'm not surprised he's coming back; it's what makes him tick," Marc Odendall, who was head of Credit Suisse First Boston's European Technology group under Quattrone, told Reuters.

"He's very calm, he's very thorough, he substantiates everything that underlines his recommendation," added Odendall, who, since leaving CSFB, has worked in microfinance and served on the board of several nonprofit foundations.

THE BEST ROLODEX IN TOWN

Quattrone returned to the world of investment banking in 2008 after two trials failed to resolve his case and he ultimately reached a deal with prosecutors that allowed him to avoid a third.

He founded tech boutique Qatalyst Group in San Francisco two years ago and has since worked with Google Inc (GOOG.O), Brocade Communications Systems Inc (BRCD.O) and Palm Inc, among others.

But it has been the 3PAR fight that has drawn Quattrone -- known for his bushy mustache, garish sweaters and love for jazz and karaoke -- back into the spotlight.

"Failing a total collapse of the deal, and that's highly unlikely given the fervent interest and rising price, the only sure winner appears to be Frank Quattrone," David Weidner, a columnist for MarketWatch and The Wall Street Journal, wrote on Friday.

Dubbed "The Prince of Silicon Valley" in a recent biography by Randall Smith, Quattrone grew up in blue-collar South Philadelphia. He graduated summa cum laude from the University of Pennsylvania's Wharton School and later from Stanford University's business school.

He became a star banker at Morgan Stanley, moved to Deutsche Bank in 1996, and to Credit Suisse in 1998.

At Credit Suisse, his group racked up huge fees for underwriting IPOs and earned him $120 million in compensation one year. Bankers said Quattrone was known for promising to work personally on deals -- an approach that is still benefiting him today.

"He has tremendous relationships. I don't think there is anybody in technology banking who can match him page for page in the Rolodex," said Brenon Daly, a financial analyst with The 451 Group, who knows Quattrone and works in the same San Francisco neighborhood.

"He's quick to smile. He knows how to negotiate."

TIMING IS EVERYTHING

Quattrone's close business relationships have also caused trouble. Federal prosecutors alleged he dished out hot IPO shares to top executives known as "Friends of Frank," in return for new business.

They later charged him with blocking a federal investigation, alleging he knew of probes into Credit Suisse's IPO share allocations when he instructed colleagues in a December 5, 2000 e-mail that it was "time to clean up those files."

After Quattrone's first trial ended in 2003 with a deadlocked jury, he was tried for a second time and convicted of obstruction and witness tampering. An appeals court later threw out the conviction.

In August 2006, Quattrone reached a deferred prosecution deal that meant there would be no third trial and, after abiding by the terms of the agreement for a year, he was allowed to rejoin the securities industry.

In March 2008, he established Qatalyst with Jonathan Turner, formerly global head of Credit Suisse's Internet banking group; Adrian Dollard, former general counsel of Credit Suisse's technology group; and Neil Chalasani, an investment banker at Evercore's technology, media and telecom group.

Since then, it has steadily built its business and brought aboard other big-name technology bankers.

Earlier this year, for instance, Quattrone hired friend George Boutros, a Credit Suisse veteran who advised Sun Microsystems on its $7.4 billion sale to Oracle Corp ORCL.O and Google on its $1.65 billion acquisition of YouTube.

Quattrone's bank appears to be winning influence at just the right moment, with the tech industry experiencing a surprising rush of deal making.

Gene Hodges, CEO of Websense Inc WBSN.O -- a security software company seen as an acquisition target following Intel's deal for McAfee -- said Quattrone has an excellent reputation for knowing how to position a company.

"Mr Quattrone would be high on the list for anyone, especially after seeing the magic that he's working here. He is doing himself a good favor for sure," Hodges told Reuters.

(Reporting by Paul Thomasch and Megan Davies; additional reporting by Quentin Webb in London and Soyoung Kim and Paritosh Bansal in New York; editing by Tiffany Wu and Andre Grenon)

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