- Fees for Bayer advisers could mount to as much as $80 million
- Morgan Stanley, Ducera also may be in line for hefty fees
Bayer AG Chief Executive Officer Werner Baumann isn’t the only one hoping his ambitious $62 billion offer to buy Monsanto Co. succeeds.
Bank of America Corp. and Credit Suisse Group AG are Bayer’s main advisers and financiers on the largest German acquisition ever, and the largest deal announced this year globally. They stand to make the bulk of as much as $80 million in advisory fees alone, should the deal go through, according to Freeman & Co. estimates. Rothschild is also advising Bayer.
The all-cash offer comes with a substantial equity component as Bayer plans to raise at least $15.5 billion from investors for its offer. The sale would be the largest equity raise for an acquisition, data compiled by Bloomberg show. The banks on the capital increase will make as much as 3 percent of the deal size in underwriting fees and up to 0.5 percent of the debt financing amount in fees, Freeman estimated.
Morgan Stanley and Ducera Partners, the banks advising Monsanto, could split as much as $110 million in fees should the deal succeed.
Bayer offered $122 a share in cash for Monsanto, the Leverkusen, Germany-based company said in a statement on Monday. The offer, which values Monsanto’s equity at about $53 billion, represents a 37 percent premium to the May 9 closing price. The payment would be funded with a combination of debt and equity. Bayer doesn’t envision selling any assets to fund the purchase, Baumann said.
Bank of America rose two spots to No. 3 globally in merger advisory this year after Bayer announced its bid, followed by Credit Suisse, which climbed five places on the strength of its role in the deal. Both banks are likely to see similar advancements in their equity advisory placings should the deal go through. Rothschild climbed 10 spots to No. 9 globally after the deal was announced.