(Adds context in paragraph 3 to clarify fees are unlikely in
event deal is not consummated)
* Banks likely to earn only 5-10 pct of $260-340 mln fee
* Pfizer advisers unlikely to receive any fees -source
* Boutique firm Robey Warshaw likely to benefit most from
By Sophie Sassard
LONDON, May 20 Bankers advising pharmaceuticals
companies Pfizer and Britain's AstraZeneca are
likely to miss out on $260-340 million in fees after the U.S.
company's final takeover bid was rejected on Monday.
Pfizer's sweetened 70 billion pound ($118 billion) offer was
dismissed by AstraZeneca as being too low and the U.S. group is
expected to announce by Monday that it will now abandon its move
to create the world's biggest drugs group.
The U.S. company's advisers at JP Morgan, Bank of
America Merrill Lynch and Guggenheim Securities are
likely to be the biggest losers. A source familiar with the
situation said Pfizer is unlikely to pay any fees if the deal is
Pfizer has not yet discussed the matter with its banks and
is expected to follow its policy of not paying any consolation
fees, the source said.
As a lead adviser to the U.S. company, JP Morgan would have
earned the biggest share of the fees.
AstraZeneca's advisers, however, are expected to receive
5-10 percent of their $130 million fee pool, according to
estimates by U.S.-based Freeman Consulting Services (FCS).
The British company's advisers Robey Warshaw, Evercore
, Morgan Stanley and Goldman Sachs would
have earned up to $130 million and are set to miss out on about
$32.5 million each, FCS estimates.
With its low-cost structure, the newly formed Robey Warshaw
advisory boutique is likely to benefit most from the deal, even
if it fails. As a lead adviser to AstraZeneca, the firm led by
former Morgan Stanley banker Simon Robey and ex-UBS dealmaker
Simon Warshaw is set to receive up to $10 million - a huge
amount for a team of less than 10 people.
AstraZeneca, JP Morgan, Bank of America, Goldman Sachs,
Robey Warshaw and Evercore all declined to comment, while
Pfizer, Morgan Stanley, Guggenheim Securities were not
immedialtey available for comment.
Buyside advisers tend to earn more money than those acting
on a deal defence because the preparation for a takeover bid
requires more work. However, AstraZeneca's advisers would have
received an extra payout if Pfizer's bid had gone hostile.
Severn Trent paid its advisers 19 million pounds
($32 million) for helping them to see off a bid consortium led
by Candian infrastrucure investor Borealis. Some
industry players and media observers questioned whether bankers
deserved such a high sum for a four-week tussle in a regulated
sector with no formal bid on the table.
Marks & Spencer shelled out nearly 39 million pounds
in 2004 to rebuff a takeover bid led by former executive Philip
Green and develop a new standalone strategy.
Under siege from fellow miner BHP Billiton ,
Rio Tinto ran up miscellaneous costs of $325
million in 2008.
Thomson Reuters data shows that M&A fees for completed
transactions are up 1 percent since January at $7.4 billion,
reflecting the increase in activity this year. M&A volumes rose
by 54 percent in the first quarter, driven by a string of large
Goldman Sachs currently tops the rankings for global M&A
advisory by deal volume and fees, Thomson Reuters data shows. JP
Morgan ranks second by fees and fourth by announced
transactions, while Robey Warshaw is 13th for global advisory.
($1 = 0.5943 British Pounds)
(Editing by David Goodman and Jane Baird)