Bankers bank millions after LSE-Deutsche debacle
Bankers and lawyers behind the failed Deutsche Borse-LSE merger will walk away with tens of millions of dollars.
Bankers and lawyers behind the London Stock Exchange’s failed merger with Deutsche Borse will walk away with tens of millions of dollars in fees, despite bungling a deal that would have combined Europe’s two leading exchanges.
Freshfield, the City law firm advising the LSE, was set to receive as much as £62.4 million ($101.3m) for working on the tie-up had it been successful, and still is likely to receive much of this money.
Investment banks including Barclays, Goldman Sachs and JPMorgan were set to share a payout worth £97.7m and will still enjoy a big payday.
All told, the LSE had said the merger would cost it £175m and a source close to the exchange said it would still have to hand over a “significant proportion” of the money, even though the combination with its Frankfurt-based rival would no longer go ahead after being blocked by Brussels.
The European Commission this week laid out a damning set of findings against the handling of the £24 billion deal. Margrethe Vestager, head of competition policy, said that key documents were submitted only “minutes” before they were due.
“Our merger reviews work to tight deadlines. This includes the deadline for submitting remedies to solve our concerns. The later we get those proposals, the less time we have to review them — and the less time the parties have after the market test to improve them. In this case, the parties proposed the initial version of the remedies only minutes before the deadline,” Ms Vestager said.
A roll call of top banks face questions over the deal, which one senior City lawyer described as “the worst case of bungling” he had seen in a high-profile merger.
Robey Warshaw, a top London-based boutique firm, could still bank millions of dollars after acting as financial adviser to the LSE, while a further six investment banks could share tens of millions in fees.
The bankers directly involved in the deal boasted some of the top M&A advisers in Europe, including Sir Simon Robey, the co-founder of Robey Warshaw, who along with his colleagues last year took a slice of a bonus pot at the firm worth £37m.
Others working on the deal were Mark Sorrell, head of M&A at Goldman Sachs in Europe and son of WPP boss Sir Martin Sorrell, while Deutsche Borse’s roster of six investment banks included Perella Weinberg Partners, the high-end advisory firm.
However, observers were astonished that such an elite group of professional financiers and legal experts had failed to spot the competition problems that led the commission to block the deal.
“To my eyes this looks like a cock-up. The pre-deal competition analysis should have picked up all the potential problems ... they were completely blindsided by the commission’s objections,” one senior London-based lawyer said.
Last month, the commission said the LSE would have to sell MTS, its Italian bond-trading platform, to secure approval. However, after the LSE rejected the request and suggested what Ms Vestager described as a “complex bundle of behavioural measures” the deal was effectively dead in the water.
The Times