RBC, BofA Could Earn $95 Million on Shoppers Sale

Royal Bank of Canada and Bank of America Corp. may share as much as $95 million in fees for advising on Loblaw Cos.’ C$12.4 billion ($11.9 billion) takeover of Shoppers Drug Mart Corp., according to Freeman & Co.

Royal Bank’s RBC Capital Markets investment-banking unit may get $38 million to $50 million for advising Shoppers Drug Mart, according to Lam Nguyen, a director at Freeman, which advises the financial industry on mergers. Bank of America’s Merrill Lynch stands to earn $32 million to $45 million for advising Loblaw, Canada’s biggest grocery store chain.

Loblaw’s purchase of Toronto-based Shoppers Drug Mart would be the world’s second-largest retail food acquisition in the past decade, according to data compiled by Bloomberg. In 2006, Supervalu Inc., CVS Corp. and a group of investment firms including Cerberus Capital Management LP bought grocery chain Albertson’s Inc. for $15.9 billion and split it into three parts.

The acquisition by Brampton, Ontario-based Loblaw is more than double the amount of last month’s agreement by Empire Co.’s Sobeys Inc. to buy the Canadian stores of Safeway Inc. for about C$5.8 billion.

The Loblaw deal propels Bank of America to the No. 1 rank for advising companies on Canadian takeovers this year with 13 deals valued at $19.7 billion, according to the data compiled by Bloomberg. RBC Capital Markets is second, with 30 takeovers valued at $18.6 billion.

Gillian McArdle, an RBC Capital Markets spokeswoman, declined to comment on the deal, while Bank of America’s John Yiannacopoulos didn’t immediately return a call seeking comment.

Freeman, based in New York, uses its own model to estimate bank fees based on deal size, industry and nature of the transaction.

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