The bank is set to collect $ 120 million if the deal closes, according to a merger proxy filed on October 19.
That is the second-largest deal fee for a single bank on record, according to data provider Dealogic, just behind the $ 122.3 million Merrill Lynch earned advising a trio of banks led by Royal Bank of Scotland in a $ 101 billion deal for ABN Amro Holding in 2007.
Morgan Stanley advised Monsanto on the Bayer deal, which was announced in September after months of back-and-forth between the two companies. The German pharmaceutical and chemical conglomerate approached Monsanto in May with an offer of $ 122 a share. Monsanto ultimately negotiated the price up to $ 128 a share in cash, a roughly 5% increase.
The companies aim to close the deal by the end of 2017.
The big payout is a bright spot in an otherwise muted year for mergers and acquisitions activity. Global deal volume currently stands at roughly $ 2.6 trillion, according to Dealogic, a 24% drop over the same period in 2015, a year when corporate deal making surged to record levels.
The fee will more than make up for the $ 60 million Morgan Stanley lost out on when Pfizer and Allergan called off their $ 150 billion mega-merger earlier this year. The bank advised Allergan in the deal, which fell apart after US regulators issued new rules meant to curb tax-lowering foreign deals known as inversions.
Morgan Stanley is currently in third place among global M&A advisers this year, behind Goldman Sachs Group Inc. and JP Morgan.
As is typical in M&A transactions, the bank won’t pocket the fees until Bayer and Monsanto complete the deal. US and European regulators are currently reviewing the tie-up, which would create a global agricultural powerhouse.
While there isn’t much overlap between the two companies – Monsanto is largely focused on seeds and Bayer’s business is heavily tilted toward pesticides – a broader consolidation of the agricultural products business is taking place that could give regulators pause.
The European Union is investigating the proposed merger of rival seed suppliers Dow Chemical Co and DuPont and indicated it would take a close look at a Bayer-Monsanto combination before the deal was announced.
The deal is also a big winner for Ducera Partners, a boutique launched last year by former Perella Weinberg Partners bankers best known for their work on behalf of financially troubled companies and their lenders. Ducera, which also advised Monsanto, was paid a $ 10 million fee for delivering a fairness opinion on the deal and stands to receive an additional $ 35 million if it closes.
This article was published by The Wall Street Journal