Morgan Stanley recovers lost ground in M&A rankings

NEW YORK Fri Mar 27, 2009 1:23pm EDT

A stock ticker is seen on the outside of the Morgan Stanley building in New York, October 8, 2008. REUTERS/Lucas Jackson

A stock ticker is seen on the outside of the Morgan Stanley building in New York, October 8, 2008.

Credit: Reuters/Lucas Jackson

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NEW YORK (Reuters) - In a dry quarter for deals, two massive pharmaceutical transactions helped catapult Morgan Stanley to the top of the league in global adviser rankings, bringing it up from the tenth spot a year earlier.

Morgan Stanley ranked first in the closely watched M&A rankings, or league tables, of investment banks in the first quarter, according to preliminary data from Thomson Reuters, reversing its fortunes after it missed out last year's biggest deal -- the $113 billion spin-off of Philip Morris International.

The bank was an adviser to Wyeth on its $64.5 billion acquisition by Pfizer Inc and also advised Schering Plough Corp on its $46 billion takeover by Merck & Co Inc, according to the data released on Friday. Both deals are yet to close.

The Wyeth deal also helped boutique investment bank Evercore Partners Inc, which shot up from the 42nd position on the league tables last quarter to the tenth slot this year.

"I wouldn't want to place too much emphasis on any particular quarter's rankings. This is not a quarter-to-quarter business," Evercore Chairman Roger Altman said.

But Altman added that Evercore benefited from the financial crisis that affected many large banks.

"The seismic financial events of the past 20 months have favored Evercore," he said. "The number of worthy and battle-ready competitors are fewer today."

DEALING WITH THE GOVERNMENT

Goldman Sachs dropped to fourth place in the first quarter from the top spot over the same period last year. Although Goldman advised on both the big pharmaceutical deals, it missed out on the biggest government-backed transactions in the first quarter.

These included the UK government's investments in Lloyds Banking Group PLC and Royal Bank of Scotland Group PLC.

Government-backed deals, largely in the financial sector, increased 249 percent to $130 billion in the first quarter, the data showed.

Citigroup Inc, Credit Suisse Group AG, Deutsche Bank, UBS AG and Morgan Stanley were advisers on the RBS deal, which totaled $44.1 billion.

Credit Suisse, Deutsche, JPM Cazenove, UBS and Citi advised on the $22.3 billion Lloyds transaction.

JPMorgan Chase & Co and Citi held onto their second and third spots respectively.

In the U.S. rankings, Barclays slipped to the No. 6 spot in the first quarter, down from No. 3 in the same period last year, according to the data, which is as of March 25.

Barclays bought only the North American investment banking and capital markets operations of failed Lehman Brothers Holdings Inc's, which would skew global comparisons for the bank.

GLOBAL SLUMP

The data came as tight credit conditions and poor visibility have kept many companies from being able to reach deals.

Global M&A activity fell 33 percent to $444 billion in the first quarter, marking the lowest volume at the start of the year since 2003, according to the data.

The slump is bad news for banks, which have seen overall investment banking fee activity cut in half to $10 billion so far this year, the lowest in any quarter since 1998.

But one quarter may be too short a period to predict how the banks' fortunes will play out over the rest of the year, experts said.

"It's no different than having a thinly traded market," said Morton Pierce, chairman of law firm Dewey & LeBoeuf's mergers group. "One transaction doesn't necessarily indicate the price, if it is very thinly traded."

(Reporting by Jui Chakravorty Das and Paritosh Bansal; Editing by Gary Hill)

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