Deutsche Bank Gets a Much-Needed Boost Working for Big Tobacco

  • German bank landed a lead role advising, financing BAT bid
  • Bank’s M&A league table rating gained five spots Friday

Deutsche Bank's Big Tobacco Boost Ahead of Earnings

In a year where little’s gone Deutsche Bank AG’s way, investment bankers at the German lender just got their biggest break so far.

The firm is a lead financial adviser and sponsor on British American Tobacco Plc’s planned $47 billion takeover of Reynolds American Inc., its biggest deal of 2016. Deutsche Bank also told the London-based tobacco company it is “highly confident” it will be able to obtain financing commitments for the offer, according to a BAT statement released Friday.

The deal has pushed Deutsche Bank up five spots in the rankings for European mergers and acquisitions this year, up from ninth as of Thursday, according to data compiled by Bloomberg. The company’s global rankings moved up one spot to ninth, the data show. BAT’s offer to buy out the remaining stake in Reynolds is the biggest deal announced in Europe since the U.K.’s June vote to leave the European Union threw markets into chaos.

The bank, Germany’s largest, had dropped down the tables earlier this year after missing out on Bayer AG’s approximately $66 billion acquisition of Monsanto Co. Deutsche Bank had chosen to advise rival German chemicals giant BASF SE, which has been largely on the sidelines of the industry’s consolidation wave, people familiar with the matter said at the time.

Deutsche Bank has been an adviser to BAT for more than a decade and became the company’s corporate broker last year, replacing JPMorgan Chase & Co.

Rivals Move In

Deutsche Bank’s largest rivals moved in to win market share in Europe as the company dealt with costs tied to a restructuring plan and mounting legal charges related to a mortgage-backed securities investigation in the U.S. and alleged money-laundering in Russia, people familiar with the matter said previously.

Chief Executive Officer John Cryan is cutting jobs, selling assets and suspending dividend payments to shore up capital and profitability, battered by negative interest rates, volatile markets and tougher capital rules. Deutsche Bank’s advisory revenue fell 22 percent to 225 million euros ($245 million) in the first half of the year from the same period in 2015, company filings show.

Deutsche Bank shares rose 0.3 percent to 13.07 euros at 2:50 p.m. in Frankfurt trading Thursday. The stock has declined 42 percent this year.

Deutsche Bank will split the fee pool with Centerview Partners and UBS Group AG, who are also acting as financial advisers to BAT. UBS is joint corporate broker and sponsor with Deutsche Bank on the deal. UBS climbed five spots to third on European M&A for the year on Friday while Centerview gained 12 positions to rank 13th, according to data compiled by Bloomberg.

UBS and Deutsche Bank are the top advisers to BAT on all of the company’s transactions, according to the data.