Goldman Jumps in M&A, LionTree Emerges in $50 Billion DayJacqueline Simmons and Aaron Kirchfeld
Three banks climbed to the top of the merger rankings within 24 hours after landing roles on this year’s two largest deals valued together at almost $50 billion, as a mergers and acquisition recovery gathers strength.
Goldman Sachs Group Inc., Credit Suisse Group AG and JPMorgan Chase & Co. have taken the lead, displacing Barclays Plc and Citigroup Inc. and vaulting Goldman to first place from third, according to data compiled by Bloomberg. LionTree Advisors LLC, a boutique founded last year, won the lead role advising Liberty Global Inc. in its $23.3 billion takeover of U.K. cable operator Virgin Media Inc.
The three large lenders won advisory roles on the Liberty Global deal and the bid to take Dell Inc. private in a transaction valued at $24.4 billion. The equity value of those deals accounts for about one-eighth of the $205 billion announced so far this year in an M&A recovery that may be gathering speed.
“I am surprised the M&A recovery has taken so long,” said Philip Keevil, a partner at New York-based Compass Advisers Group LLC, which is merging with Richmond Park Partners to form Compass Partners. “I do think you are going to see an increase in deals where companies in one market want to be in more than one market, or a No. 3 player in a particular market is seeking acquisitions to become No. 1.”
The Virgin Media takeover is the biggest media company deal since the $17.4 billion merger that created Thomson Reuters Corp. in 2007, according to data compiled by Bloomberg.
The nearly 3,000 deals announced so far this year and 103 announcements yesterday alone are encouraging signs for bankers, who need more companies with ambitious growth strategies before they can trust in the recovery.
While global M&A rose to the highest level in four years last quarter, full-year volumes fell almost 9 percent in 2012 to $2.21 trillion, according to data compiled by Bloomberg.
“One swallow does not a summer make,” Keevil said. “I talk to clients who say industry bankers at some of the larger banks are leaving or shutting down departments.”
Financial firms worldwide have announced more than 330,000 job cuts since 2011, according to data compiled by Bloomberg. Still, there are reasons to expect more mergers and acquisitions this year, bankers said.
“CEOs have an average lifespan of four to five years. If you want to keep being CEO and not get dumped by your shareholders, you have to keep growth,” Keevil said. “There’s nothing more to cut, so growth can only come from strategic mergers.”
All together, the banks advising Virgin Media and Liberty Global are set to earn as much as $100 million in fees, according to Freeman & Co. data.
Goldman Sachs and JPMorgan are advising both Dell and Virgin Media. Credit Suisse has a role advising John Malone’s Liberty Global and is the lead global coordinator for its debt financing.
The Swiss bank, which reduced the global headcount at its investment bank by about 1,300 in the 12 months through September, is also advising Silver Lake Management LLC, the U.S. buyout firm working with Michael Dell to take the computer maker private.
The lead financial adviser to Liberty Global in its takeover is a little-known boutique named LionTree Advisors. The bank is led by Chief Executive Officer Aryeh Bourkoff, who advised “American Idol” host Ryan Seacrest’s company on an agreement to purchase most of Civic Entertainment Group LLC last year.
Based in New York, Bourkoff was the head of Americas for UBS AG’s investment bank until April, and previously served as a global co-head of the bank’s technology, media and telecommunications team. Bourkoff works with Ehren Stenzler, who came with him to LionTree after being co-head of UBS’s U.S. M&A team.
Since founding LionTree in July, the firm has carved out a niche in the cable space and advised companies including Leo Cable LP and Suddenlink Communications.
Goldman Sachs’s Peter Gross and Michael Smith, both managing directors, were key advisers to Virgin Media. Goldman advised NTL Inc. on its merger with Telewest Global Inc. and has since represented the combined company, now known as Virgin Media, on numerous transactions since.
The JPMorgan team was led by David Lomer, who became co-head of technology, media and telecoms for Europe last year, and Benjamin Berinstein, a managing director based in New York and co-head of corporate finance advisory. They were joined by Chris Ventresca, a co-head of the bank’s North America M&A team.
Lomer, who previously headed the bank’s media business, helped lead last year’s initial public offering of Dutch cable company Ziggo NV. JPMorgan also advised Swedish buyout firm EQT Partners AB on the sale of Germany’s third-largest cable television provider, Kabel Baden-Wuerttemberg GmbH, to Malone for about 3.16 billion euros in March 2011. It also helped Liberty finance the takeover.
Credit Suisse’s Liberty Global debt advisory team was led by Marisa Drew, co-head of the Swiss bank’s global markets solutions group. Giuseppe Monarchi, London-based co-head of M&A in Europe, the Middle East and Africa, led on advisory alongside managing director John Trousdale, head of media and telecommunications in New York.
Credit Suisse has a longstanding role backing Liberty deals, helping it finance the Kabel BW takeover, the acquisition of Unitymedia and the purchase of Switzerland’s Cablecom.
Evercore Partners Inc. is advising the Dell board of directors and running the go-shop process. Bank of America Corp., Barclays, Credit Suisse, and RBC Capital Markets are providing advice and financing to Silver Lake.