Bragging Rights

Who's Advising on ABN Deal? Only 19 Who Insist `I'm Spartacus'
By Ambereen Choudhury

Aug. 28 (Bloomberg) -- Like the rebellious Roman slaves who vowed to save their leader by declaring ``I'm Spartacus,'' the contested sale of ABN Amro Holding NV has 19 investment banks each insisting it is advising the would-be winner in the financial industry's largest takeover.

The Romans never found Spartacus and no one may ever know the real adviser to the victor of this six-month battle. Goldman Sachs Group Inc., UBS AG, Morgan Stanley, Lehman Brothers Holdings Inc. and N.M. Rothschild & Sons Ltd. make equal claim to coaching Amsterdam-based ABN Amro.

For its 61 billion-euro ($83.5 billion) bid for the Netherlands' biggest bank, Barclays Plc has retained Citigroup Inc., Credit Suisse Group, Deutsche Bank AG, JPMorgan Cazenove Ltd. and Lazard Ltd. as counselors. A Royal Bank of Scotland Group Plc-led group appointed Merrill Lynch & Co. the strategist for its 72 billion-euro counter offer and enlisted Greenhill & Co., Fox-Pitt, Kelton Ltd., NIBC Holding NV, Banco Santander SA, Fortis and its own executives for extra help.

``I cannot recall a deal that has so many advisers,'' said Scott Moeller, a professor of mergers and acquisitions at Cass Business School in London and a former banker at Morgan Stanley and Deutsche Bank. ``The most significant issue is bragging rights. It's more important to the bank than the client.''

No securities firm can afford to be left out if it hopes to be counted among the leaders in a record year for mergers and acquisitions. Takeovers already surpassed $3.28 trillion in 2007, just $277 billion short of last year's total, according to data compiled by Bloomberg.

Full Credit
Each banker to ABN Amro will be credited with the full value of the purchase in mergers tables. Those representing London- based Barclays and Edinburgh-based Royal Bank only get recognized if their suitor wins. Santander of Santander, Spain, and Fortis, based in Brussels and the Dutch city of Utrecht, are bidding with Royal Bank.

This year's top three advisers -- New York-based Goldman, Citigroup and Morgan Stanley -- have little more than ABN Amro's $90 billion market value separating them in the rankings.

Goldman and Morgan Stanley's spots are safe no matter who wins because they are working for ABN Amro. Citigroup will lose its No. 2 ranking if the Barclays bid fails, while Merrill would drop as low as eighth place from fifth should Royal Bank lose.

A handful of the firms will get the lion's share of what New York-based Freeman & Co. estimates to be as much as $459 million in M&A fees because most are providing limited services for their clients, said people with knowledge of the talks. Bankers may collect another $170 million for underwriting the stocks and bonds needed to finance the acquisition, according to Freeman.

`Trophy Deal'
The purchase of the biggest Dutch bank will eclipse Travelers Group Inc.'s $69.9 billion buyout of Citicorp in 1998, until now the biggest in the financial industry. It also may become the third-largest ever, behind the $186 billion acquisition of America Online Inc. by Time Warner Inc. in 2000 and Vodafone Group Plc's $185 billion hostile takeover of Mannesmann AG in 1999, according to Bloomberg data.
``Nobody wants to miss it,'' said David Dodds, an investment analyst who helps manage $1.2 billion at SVM Asset Management in Edinburgh. ``It's a trophy deal.''

ABN Amro has become more important after the rout in securities related to subprime mortgages caused investors to shun riskier assets, increasing costs for financing mergers.

Fees from advising in mergers accounted for about 5 percent, or about $6.4 billion, of the combined revenue last year at Goldman, Morgan Stanley, Merrill and Lehman. Fixed-income and equities trading generated about half of the firms' revenue and underwriting accounted for almost 9 percent.

Slowest Month
August has been the slowest month for deals since July 2005, Bloomberg data show. London-based Cadbury Schweppes Plc, the world's biggest candy maker, and Virgin Media Inc. have delayed asset sales. Atlanta-based Home Depot Inc., the biggest home- improvement retailer, had to cut the price on its contractor- supply business by 18 percent to $8.5 billion to salvage a sale.

Using a group of banks allows companies to reward financiers and eliminate support for rival bidders.

``Companies hire advisers to honor prior favors and relationships,'' said Roy Smith, professor of finance at New York University's Stern School of Business and former head of Goldman's London office. ``It probably doesn't make too much difference how many you have, except that the chairman will get fewer frantic pleading calls if he hires several.''

Six Banks
Barclays hired JPMorgan Cazenove and Lazard in February and added Citigroup, Credit Suisse and Deutsche Bank in March, the month it announced the merger talks. It also has about 15 of its own employees on the deal.

Until last year, Barclays Chairman Marcus Agius, 61, was the U.K chairman of New York-based Lazard, the firm run by Bruce Wasserstein. He helped arrange Halifax Group Plc's 9.8 billion- pound ($20 billion) purchase of Bank of Scotland in 2001 to create HBOS Plc, the biggest U.K. mortgage lender.

Lazard's team is led by Jeffrey Rosen, 59, who advised Wal- Mart Stores Inc., the world's biggest retailer, in its acquisition of U.K. supermarket chain Asda Group Plc for $10.8 billion in 1999.

JPMorgan Cazenove's corporate-broking relationship with Barclays stretches back more than two decades. Cazenove, overseen by Chairman David Mayhew, 67, formed a joint venture with New York-based JPMorgan Chase & Co.'s U.K. unit in 2004.
Corporate Brokers
Corporate brokers, unique to the U.K., act as liaisons with investors and help companies comply with London Stock Exchange rules. They accept nominal fees or work for free, expecting the relationship will lead to underwriting and M&A assignments.

Credit Suisse, the second-largest Swiss bank, has been Barclays's other broker for about 15 years. Zurich-based Credit Suisse worked on the U.K. company's largest deals, including the 5.9 billion-pound purchase of Woolwich Plc in 2000, and bought Barclays's BZW equities and investment-banking arm 10 years ago. The team is led by London-based European mergers chief David Livingstone, 44, and Ewen Stevenson.

Frankfurt-based Deutsche Bank's team is led by Tony Burgess, 48, and Tadhg Flood, 35, while Citigroup's is under Hamid Biglari, 48, and Christopher Williams. The biggest German bank and Citigroup, the largest U.S. financial-services company, were hired for their relationships with hedge funds and prime- brokerage businesses, according to two people with knowledge of the deal.

Balance Sheets
``A number of the advisers are there to prevent them representing others,'' said Philip Keevil, a senior partner in London at Compass Advisers LLP and former head of European mergers at Salomon Smith Barney Inc. ``Some of them are there because they have large balance sheets and could help push the ball over the line.''

Morgan Stanley's Donald Moore and UBS's John Cryan are the lead advisers to ABN Amro. Zurich-based UBS arranged the Dutch bank's sale of its Bouwfonds property management units for 1.69 billion euros last year. UBS, the biggest Swiss bank, and Morgan Stanley, the second-largest U.S. securities firm by market value, have been paid about 39 million euros each, according to U.S. regulatory filings.
ABN Amro's own employees are playing a part, along with bankers from Goldman, New York-based Lehman and London-based N.M. Rothschild.

The Royal Bank-led group is relying on a team of about 15 Merrill bankers led by Andrea Orcel, 44, and London-based Matthew Greenburgh, 46. Merrill has advised Royal Bank since about 1999, when the company bought National Westminster Bank Plc in a 23.6 billion-pound hostile takeover. Merrill has also advised Santander, according to Bloomberg data.

Merrill Lynch
New York-based Merrill, the third-biggest U.S. brokerage firm, may earn about 90 million euros from advising the Royal Bank group if it's successful, according to a person with direct knowledge of the talks. It may get another $120 million for helping finance the deal, Freeman's estimates show.

The members of the Royal Bank group are also using advisers from their own companies as well as New York-based Greenhill, NIBC, based in the Hague, and Fox-Pitt, Kelton, a London firm specializing in the financial industry, according to Bloomberg data.

ABN Amro spokesman Jochem van de Laarschot said the company has ``a number of advisers and they each have their role.'' Spokespeople for all the banks weren't immediately available or declined to comment.

Multiple advisers are common in larger deals. The 13 billion-euro takeover battle for Altadis SA, the Spanish maker of Gauloises cigarettes, and the 63 billion-euro contest for Endesa SA, Spain's largest power company, both attracted about a dozen investment banks, according to Bloomberg data.

``Increasing the number of advisers doesn't increase the quality of the advice,'' said Compass's Keevil. ``It's payback time for the relationship banks, particularly for ABN Amro, for which this is the last deal.''