For everyone involved in the epic merger of Porsche and Volkswagen that began to take shape Thursday, it has been a long and bumpy ride. But for the banks involved, it has been worth it.
With the announcement of preliminary details of a deal that will ultimately meld the legendary German auto makers, it is becoming clearer what the deal will be worth to those banks lucky enough to land a role advising on it -- and what those that didn't are missing out on.
For the purposes of the league tables that rank investment banks on the dollar value of deals advised on, the deal has three parts, according to Dealogic: Volkswagen's €3.3 billion ($4.7 billion) purchase of a 42% stake in Porsche's operating unit; Qatar's purchase of Volkswagen options from Porsche valued at €5 billion; and the emirate's purchase of a stake in Porsche, which could be valued at another €5 billion if finalized.
That makes for €13.3 billion of overall deal credit, a big prize for M&A bankers in normal times and a positive bonanza at a time when activity is the slowest it has been in years. (For those who need convincing, there has been roughly $333 billion of deals announced in Europe this year, according to Thomson Reuters, $1 trillion less than in the same period two years ago.) It is possible the value of the Porsche-VW deal will increase, too, given that the companies said the goal is for VW to ultimately subsume all of Porsche in 2011.
While no advisers were named in Thursday's announcement, Dealogic is crediting Citigroup, UBS and Rothschild with advising VW; Deutsche Bank, Morgan Stanley and Goldman Sachs Group with advising Porsche; and Credit Suisse with working with Qatar.
Even though the banks may have worked on only certain aspects of the overall deal, there is plenty of league-table credit to go around, not to mention the prestige and bragging rights, and the hearty stream of fees that is sure to flow from such a complicated and time-consuming undertaking.
- Dana Cimilluca
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