Drugmakers Bristol-Myers Squibb and Celgene will pay about $1bn in fees to seal their $90bn tie-up, including more than $300m to their financial advisers, in one of the most lucrative advisory assignments ever recorded on Wall Street.
The fees will be split among a handful of investment banks, including Morgan Stanley, JPMorgan Chase and Citigroup, as well as the lawyers, accountants and consultants who advised on the deal to unite the two pharmaceutical companies, according to a regulatory filing late last week.
Some $304m will be paid to the five investment banks for their work advising on the deal, ranking among the largest paydays ever for advisory services on a takeover, according to Dealogic and Refinitiv data.
Celgene estimated the costs related to its sale were $225m, while Bristol-Myers Squibb pegged its outlays at $200m before financing fees.
The deal, which itself ranks among the largest healthcare takeovers of all time, was financed by one of the biggest bridge loans on record, a funding package led by Morgan Stanley and MUFG Bank. Bristol-Myers Squibb estimated the cost of the $33.5bn loan at $547m.
The overall costs on the deal rival the near $1bn that Japanese pharmaceutical group Takeda spent on its purchase of Shire last year, although it is dwarfed by the roughly $2bn of expenses and fees paid by brewer Anheuser-Busch InBev on its £79bn takeover of SABMiller in 2016.
Acquisition activity around the globe has slowed amid geopolitical uncertainties related to Brexit, the trade war between the US and China, and fears that global economic growth is ebbing. A drop in overall deal numbers has heightened the importance of winning advisory mandates on these mega-deals for investment banks.
Bankers and lawyers worked with haste to sew up the transaction between the two pharmaceutical groups after Bristol-Myers Squibb’s chief executive proposed a buyout to the head of Celgene over dinner on September 21, the disclosure showed. The deal was agreed and unveiled to investors less than four months later.
Roughly 80 per cent of the $304m in financial advisory fees will be paid once Celgene and Bristol complete the transaction, which still requires shareholder and regulatory sign-off.
Payouts, which are likely to run into the millions of dollars, are also due to legal counsel Kirkland & Ellis and Wachtell Lipton, accountants KPMG, EYand Deloitte, as well as payments to public relations advisers including Joele Frank. The companies will also have to pay the costs to retire some of Celgene’s debt at a premium.
Morgan Stanley disclosed that it will earn $82m for advising Bristol on the deal, adding that it would be paid a further $100m to provide financing and other liability management services. Evercore and Dyal Co stand to earn $55m for their work on the transaction.
JPMorgan, which is poised to earn $100m advising Celgene, has worked closely with the biotech company over the past several years, brokering its $10bn takeover of Juno Therapeutics last year and its $7bn purchase of Receptos in 2015. Citigroup will be paid $67m for its work advising Celgene.
While Bristol-Myers Squibb and Celgene worked swiftly to agree to the acquisition late last year, the companies had held takeover talks previously. In early 2017, the two companies held exploratory talks over a stock-for-stock merger of equals and entered confidentiality agreements to share materials. But the talks were called off later that year.
Citigroup, Dyal Co, JPMorgan and Morgan Stanley declined to comment. Evercore did not respond to a request for comment.
