Vodafone-Verizon deal a boon for bulge bracket banks
Vodafone's $130 billion sale of its 45 percent stake in Verizon's U.S. wireless business has cemented the position of large U.S. investment banks at the top of the M&A league table and give European peers a boost.
Long-time Vodafone adviser Goldman Sachs will remain top of the league table ranking advisers on worldwide M&A so far this year, having worked on 241 deals worth $476 billion including the Verizon deal, Thomson Reuters data estimates.
Bank of America Merrill Lynch, JP Morgan and Morgan Stanley will retain their second, third and fourth spots respectively, working with Verizon both in an advisory role and committing $61 billion in financing to fund the cash portion of the deal.
Barclays, which has also worked with Verizon, will benefit from the highest move up the rankings, from eighth to fifth.
The four banks are also advising Verizon, along with former Morgan Stanley banker Paul Taubman and Guggenheim Partners, which will move from 42nd position to 10th.
UBS, which also advised the Vodafone camp, will move from tenth position currently to sixth.
Although overall M&A activity remains lower than at this time last year, the telecom sector has been a bright spot for deal-making. According to Thomson Reuters data, telecom deals were up 28 percent this year, with 413 deals worth $94.3 billion, not including the Verizon-Vodafone deal.
The newly announced deal has now taken telecom deals activity up to $224.3 billion this year, a 202 percent increase compared to the same period last year and the highest annual total of M&A in the sector since 2006.
The transaction is also likely to be a fee bonanza for banks. At a $130 billion price tag, total advisory fees for banks involved would be in the $200 million to $250 million range, according to Freeman estimates.
Goldman Sachs also ranks number one in terms of fees earned so far this year for completed mergers and acquisitions, taking in $983 million, excluding the Vodafone-Verizon deal, Thomson Reuters data calculates.
Even with this mega transaction, investment banking fees for M&A activity globally so far this year still remain the lowest since the same period in 2009, totaling $11.2 billion.
Banks arranging the financing would get fees as well. Fees for loan syndication could be around 0.2 percent to 0.4 percent of the proceeds raised, according to Freeman.
(Reporting By Anjuli Davies; Editing by Giles Elgood)