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Bloomberg
Wall Street banks including Barclays, Goldman Sachs and Bank of America could share in a fee bonanza of as much as $600 million, after pledging one of the biggest financing checks ever to help fund CVS’s $67.5 billion takeover of Aetna.
The companies are set to shell out fees for M&A advisory, financing and also arranging a bond sale next year to replace a $40 billion bridge loan from the three banks.
Banks providing that loan could split up to $150 million, while underwriters on any debt sale could extract around $200 million combined, according to Freeman Consulting Services. The M&A advisers could net as much as $250 million in total, the firm estimated.
“This is very big for the banks with year-end coming up,†said Jeff Nassof, a director at Freeman. And a deal that’s financed with debt is more lucrative, he said, because banks can earn fees on extending a bridge loan, then on arranging a bond sale and also in the subsequent trading of the bonds. That’s on top of M&A advisory fees.
Barclays Plc, Goldman Sachs Group Inc. and Bank of America Corp. have committed to lend $49 billion for the transaction, with term loans augmenting bridge financing, a type of temporary funding. The financing usurps the previous biggest bridge for a US buyer in 2017 — a $15.7 billion loan that Citigroup Inc. set up for medical devices provider Becton, Dickinson & Co. in April
for its acquisition of C.R. Bard Inc., according to Freeman Consulting.
Other notable loans funding acquisitions include Anheuser-Busch InBev NV’s $75 billion of loans for its acquisition of SABMiller Plc in 2015 and the $61 billion loan Verizon Communications Inc. secured in 2013 for its buyout of the stake in Verizon Wireless it didn’t own.