November 9, 2007 / 6:13 AM / 11 years ago

UPDATE 1-DEALTALK-Investment banks vie for slice of Rio action

(Adds second source comment) (For more Reuters columns, click [DEALTALK/])

By Michael Smith

SYDNEY, Nov 9 (Reuters) - Investment banks are scrambling for a slice of the action following BHP Billiton’s (BHP.AX) $140 billion approach to Rio Tinto (RIO.L)(RIO.AX), a deal that would secure those involved a top place on the advisory league tables.

However, bumper fees likely to exceed $1 billion from what would be the world’s second-largest takeover — after Vodafone’s (VOD.L) 2000 acquisition of Mannesmann — would be spread among a large pool of advisers.

BHP had appointed Goldman Sachs (GS.N) and Australian boutique advisory firm Gresham Partners to advise on its offer, sources said.

Rio, which has rejected the bid, has a raft of global banks working on its team, including Rothschild [ROT.UL], Credit Suisse CSGN.VX and JP Morgan (JPM.N), sources said.

Australia’s Macquarie Group (MQG.AX) has an advisory role in the Rio camp. Morgan Stanley (MS.N) was reportedly also in there.

“A lot of banks in town are getting a gig on it in some way,” one investment banker said. “It’s going to be busy for some time though, that’s for sure.”

It was still unclear what role BHP’s broker Merrill Lynch was playing.

JP Morgan is top of the league tables for global mining deals so far this year and in 2006, according to Dealogic, whose data includes the BHP offer for Rio.

JP Morgan had 14 announced deals in 2007 so far worth $166 billion to its credit, followed by Morgan Stanley with $156 billion and Macquarie Bank with $154.6 billion, Dealogic said.

Following closely were Goldman Sachs with $154.5 billion, Rothschild with $154 billion, Credit Suisse with $153 billion, Citigroup with $152.7 billion and Fresham at $150.3 billion.

Advising on a successful deal would be a major coup for Sydney-based Gresham, which advised conglomerate Wesfarmers Ltd (WES.AX) on its A$19 billion bid for retailer Coles Group Ltd CGJ.AX, Australia’s biggest takeover to date.

Gresham and JP Morgan have a long history with BHP, advising Billiton when it agreed to merge with BHP in 2001.

BHP said on Thursday it had approached BHP with a 3-for-1 share offer, but Rio said the offer was too low.

Analysts said on Friday that other buyers, from Chinese oil companies to Siberian nickel miners, may also be looking at Rio. One source close to the matter said it was too early to say who else may take a look, but Rio’s board would consider all offers.

Another source familiar with the matter said most of the financing for a successful bid was likely to be done in Europe rather than Australia. (Editing by Ian Geoghegan)

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