Deutsche Bank Is Only Thing Missing From Germany’s Biggest Dealby , , and
Bank said not to advise on, finance Bayer’s Monsanto bid
Deutsche Bank slumped to no. 6 in deals involving German firms
Deutsche Bank AG, traditionally the go-to lender in Europe’s largest economy, is the most notable absentee in the year’s largest takeover.
Germany’s biggest lender missed out on the advisory and top-tier financing roles on Bayer AG’s $62 billion bid for Monsanto Co., according to people with knowledge of the matter. The company chose to advise rival German chemicals giant BASF SE, which has studied but so far sat out the biggest-ever consolidation wave in the global crop chemicals and seeds industry, the people said.
Because of the potential client conflict, Deutsche Bank didn’t join the more than a dozen lenders pitching at Bayer’s headquarters in Leverkusen for a financing role, the people said. In the end, the German company picked Goldman Sachs Group Inc., HSBC Holdings Plc and JPMorgan Chase & Co. to work alongside its main advisers, Bank of America Corp. and Credit Suisse Group AG, to secure $63 billion in short-term loans, said the people.
The miss comes at a time when Chief Executive Officer John Cryan faces the challenge of trying to maintain an edge over the competition while shrinking the investment bank and reorganizing staff. Cryan reshuffled top management with his strategic overhaul in October and split the securities unit into a trading division and a business, run by Jeff Urwin, advising clients on the sale of stock and bonds as well as mergers.
“It’s very unfortunate timing, because they are going to lose out on a very prestigious deal, a very prestigious piece of league table and presumably some very nice fees,” said Christopher Wheeler, a London-based analyst with Atlantic Equities LLP. “Clearly, these things do happen.”
Spokesmen for Deutsche Bank and Bayer declined to comment.
The absence on the Bayer deal has cost Deutsche Bank its top standing in a ranking of merger advisers in its home market. The firm slumped to No. 6 in deals involving German companies so far this year, the lowest since 2012, compared with its leading position in 2015 and 2014 and runner-up post in 2013, according to data compiled by Bloomberg.
In western Europe, Deutsche Bank is No. 7 in M&A so far this year, the lowest level since 2013, according to the data. Its position has been hurt by missing the two biggest deals, both in agricultural chemicals: Bayer-Monsanto as well as China National Chemical Corp.’s planned acquisition of Swiss rival Syngenta AG for more than $43 billion.
While the Frankfurt-based lender is sitting out the Bayer deal because of the potential conflict with Ludwigshafen-based BASF, rivals that worked on ChemChina’s takeover of Syngenta, including Goldman Sachs, HSBC and JPMorgan, secured a role on the financing.
Even excluding the Bayer transaction, as of June 3 Deutsche Bank ranked fourth among the arrangers of loans in Germany this year, down from first place in 2014 and 2015, according to data compiled by Bloomberg.
To be sure, league table standings often fluctuate based on whether a bank advised or missed out on one or two of the biggest transactions, like the Bayer deal.
Also, Deutsche Bank has landed a string of sizable German deals in May and June, including a Chinese takeover bid for German robot maker Kuka AG, the sale of German cookware and coffee machine maker WMF and Bilfinger SE’s disposal of a key division.
It’s also advising on the second-biggest German deal of the year, Deutsche Boerse AG’s proposed acquisition of London Stock Exchange Group Plc. And Deutsche Bank did advise Bayer on the initial public offering of its plastics unit, Covestro AG, just last year.
Still, Germany’s biggest-ever merger is a bitter miss for its top bank. If Bayer’s takeover of Monsanto succeeds, it will dwarf the second-biggest German acquisition of all time, Daimler AG’s ill-fated purchase of Chrysler Corp. in 1998 for $43 billion, which Deutsche Bank did advise on.