Big banking fees in pharma

June 17, 2009

The bankers on Merck’s pending $41 billion merger with Schering-Plough will get a nice pay day — one for the record books, in fact.

An amended proxy filing shows that the investment banks on the deal will receive more than $100 million in total advisory fees.

Goldman Sachs is set to receive $33.33 million, while Morgan Stanley will get $20 million for advising Schering-Plough, according to the filing with the U.S. Securities and Exchange Commission.

J.P. Morgan Chase is in line for a fee of $45 million for advising Merck, the filing said.

A portion of these fees are only payable upon completion of the transaction, so the deal must complete for the banks to receive the total payout.

The total target side advisory fees of $53.33 million are the 7th largest total target side disclosed advisory fee on any transaction involving a full acquisition of a U.S. public target since 2003, according to FactSet MergerMetrics.

Meanwhile, on the acquirer’s side, the $45 million advisory fee is the 4th largest total acquirer side disclosed advisory fee on any transaction involving a full acquisition of a US public target since 2003, FactSet MergerMetrics said.

“The individual advisory fees themselves are not exceptional, but the $100.33 mil payable by both the target and acquirer in the deal is the third largest total disclosed fee we have identified behind the $122 mil payable on the BellSouth / AT&T deal and the $118 Phelps Dodge / Freeport-McMoRan deals,” FactSet MergerMetrics said.

Of course, fees are not disclosed on all deals so it’s hard to get a full picture. But no matter how you look at it, $100 million is a nice chunk of change.

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