If it's November, it must be time for some mergers. Sometime back in late July, a bored investment banking VP, mad at being stuck in the office shepherding the summer associates while all the managing directors were at their houses in the Hamptons, came up with a plan. A pitch. A huge acquisition. A strategic merger! The summer associate, blinded by the glamor of writing something that would one day soon be on the desk of the CEO of Bank of America Corporation (NYSE:BAC), or Nasdaq Stock Market Inc. (NASDAQ:NDAQ), or Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), made it look fabulous. The synergies would be mind-blowing, the financial impact, in the billions.When the managing director was wooed back from the Hamptons with the promise of a meeting with Ken Lewis at Bank of America, or the Blackstone Group's patrician Jonathan D. Gray, she realized this was a brilliant idea. And immediately saw the M&A fee, like hundreds of gallons of revenue pushing the millwheel of the group's bonus pool. The summer associate carried the dozen color copies of the pitchbook to some vastly inferior city and the CEO was convinced.
Come November, the summer associate is pouring back Yuenglings at business school, basking in the full-time job offer he received to return to the investment bank, and in the nick of time, right before the managing director checks out for the holiday season, the mergers have been launched. They're not all successful, but that's part of the fun: that bored vice president will be ever more busy and will naturally have to cancel his trip home to Maine for Thanksgiving launching a counter-offer. Here's a rundown of the successful and not-so-successful deals of the day:
Freeport-McMoRan to acquire Phelps Dodge Corporation (NYSE:PD). Price: $25.9 billion in cash and stock. Investment bankers scoring bonuses: JPMorgan, Merrill Lynch. Lavish praise of deal from Phelps Dodge: "The offer that they have brought to us is a 33 percent premium over what our stock price was last quoted at. So for us, it's a very compelling transaction." Winning CEO: Freeport's Richard Adkerson. Thanksgiving possibilities: yes, JPMorgan vice presidents will be eating turkey and their Aunt Betsy's pumpkin pie come Thursday.- Nasdaq attempt to purchase London Stock Exchange. Price: value of $5.1 billion, although Nasdaq already owns 30%. Investment bankers scoring bonuses: Greenhill & Company will still get its advisory fee but no cut of the deal ... yet. Not-so-lavish praise of deal from London Stock Exchange's Clara Furse: "We believe Nasdaq's final offer fails to recognize the outstanding growth record and prospects of our group on a standalone basis let alone the exchange's unique global position." Future prospects: eventual deal seems inevitable. Thanksgiving possibilities: Greenhill's vice presidents will be eating turkey sandwiches from whatever Park Avenue deli is still open on Thursday.
- Blackstone Group to buy Equity Office Properties Trust. Price: $20 billion plus the acquisition of $16 billion in debt, the largest take-private deal ever. Investment bankers scoring bonuses: Blackstone has its own advisory group, which is probably small and thus, there will be lots of new luxury cars in the company parking garage come January. But Blackstone also scratches lots of Wall Street backs, with Bank of America, Bear Stearns, and Morgan Stanley all contributing to the deal. Lavish praise of deal from Blackstone: "We believe that the skills and strengths of Equity Office will greatly enhance our existing office platform, which has been expanded through our recent acquisitions of CarrAmerica and Trizec." Winning CEO: Unknown, although word is Equity founder and real estate personality Samuel Zell won't be majorly involved. Thanksgiving possibilities: Blackstone & friends will likely be found sharing h'or d'oeuvres at their Connecticut mansions, toasting with French Champagne before digging into Martha Stewart Living-worthy feasts.
- Bank of America to acquire private banking arm of The Charles Schwab Corporation (NASDAQ:SCHW), U.S. Trust. Price: $3.3 billion, or $400 million more than Schwab paid for it in 2000 (a fair-to-middlin' ROI). Investment bankers scoring bonuses: deal specifics haven't been released, but I'm betting on Bank of America's own advisory group, perhaps with some midtown buddies ... a.k.a. Morgan Stanley, frequent benefactor of BofA's friendship. Thanksgiving possibilities: yes, it will be a happy Thanksgiving indeed for Bank of America, the VPs in Charlotte are sure to enjoy copious amounts of sweet sherry, ham biscuit, and sweet potato pie along with their mom's special Coca-Cola marinated turkey.
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