Dead Yahoo bid hurts bankers' fees, rankings

By Jessica Hall

PHILADELPHIA (Reuters) - In an already slow year for mergers, Microsoft Corp's dead offer for Yahoo Inc has killed what little momentum existed on Wall Street and clipped investment bankers' fees and rankings.

When Microsoft pulled its $47.5 billion offer, the value of U.S. mergers and acquisitions dropped to $386.4 billion, down 41 percent from a year ago, according to research firm Dealogic. If that offer had remained in place, deal volume would have been down 34 percent this year, Dealogic said.

For the investment banks involved, the scuttled offer means the loss of a multimillion-dollar payday since advisers typically only get paid when a deal gets completed.

If the deal had gone through, Microsoft's bankers -- Blackstone Group and Morgan Stanley -- could have earned about $29.6 million, according to Thomson Financial.

When an unsolicited offers fails, however, the advisers for the bidder typically get paid for their expenses only.

Yahoo's advisers, which included Lehman Brothers Holdings Inc, Goldman Sachs Group Inc and Moelis & Co, could have earned an estimated $22 million each, Thomson said.

It is unclear what Yahoo's advisers will reap for successfully defending the Internet company from the unwanted bid. Advisers typically get a stipend or a set fee, plus expenses, for deflecting an unsolicited offer.

Since Yahoo is exploring other options, such as partnerships with Web search leader Google Inc or Time Warner Inc's AOL, its advisers may get additional transaction fees should those pacts emerge, sources familiar with the situation told Reuters. Those fees, however, would be smaller than fees earned on a full-fledged merger, the sources said.