(c) 2013, Bloomberg News.
(c) 2013, Bloomberg News.
Verizon Communications, undertaking the biggest acquisition in more than a decade, picked some of the smallest firms for financial advice.
Paul Taubman, a Morgan Stanley veteran who left the bank earlier this year and is now working independently, and New York-based Guggenheim Partners LLC landed key roles advising Verizon on its planned $130 billion purchase of Vodafone Group Plc's 45 percent stake in their wireless joint venture, said two people with knowledge of the deal. They're working alongside JPMorgan Chase & Co., Morgan Stanley, Barclays Plc and Bank of America Corp., which are providing just over $60 billion in financing, the people said, asking not to be identified before an official announcement.
The choice shows how smaller-scale advisers are taking lead roles working on some of the most significant corporate transactions. The summer's last blockbuster deal, the $30 billion merger of Publicis Groupe SA and Omnicom Group Inc., didn't include a single large bank on its roster, with Rothschild and Moelis & Co. working with the French and U.S. companies, respectively.
Proponents of smaller firms say their focus on mergers and acquisitions advice helps them provide executives with impartial guidance, while dealmakers at big banks say their firms' global reach and broad role in the financial markets are advantageous.
It will still provide plenty of work for large banks. In addition to the other firms working with Verizon, Vodafone has tapped long-time advisers Goldman Sachs Group Inc. and UBS AG, the people said.
Their work will help Verizon take full control of its largest asset, allowing it to use the unit's cash flows to invest in faster networks to fend off challenges from AT&T Inc. and Sprint Corp. For Vodafone, the deal will mean a windfall of more than $100 billion after tax that could fuel future acquisitions of cable operators.
The firms on both sides of the deal may get more than $240 million in fees, according to estimates from New York-based research group Freeman & Co. That compares with about $70 million in fees for the merger of Publicis and Omnicom.
Guggenheim Partners ranks 42nd in the global league tables for merger advice this year, working on about $10 billion in deals, according to data compiled by Bloomberg. The Verizon role would bring Guggenheim to No. 8 for advising on M&A transactions globally, the spot currently held by Lazard Ltd., the data compiled by Bloomberg show.
The firm grew out of the family investment office of the Guggenheim family, the namesake of modern art museums in New York, Venice, and Bilbao, Spain.
Taubman oversaw investment banking at Morgan Stanley before departing this year after 27 years at the firm. The departure followed three years of dual leadership of Morgan Stanley's investment bank with longtime competitor Colm Kelleher, who became sole head. The two clashed over how aggressively to pursue additional business with clients whom the bank was assisting with capital-markets deals, people familiar with the matter said last year.
While it's unusual for a person to be credited individually as an adviser on a large transaction, Taubman's role isn't without precedent. Former Citigroup banker Michael Klein worked as a "strategic consultant" to both Glencore and Xstrata in the 2012 deal that created Glencore Xstrata Plc, the world's largest combined mining and commodity-trading company.
Representatives for Goldman Sachs, UBS, JPMorgan, Bank of America, Barclays and Morgan Stanley declined to comment on their roles on the Verizon transaction. Calls to Guggenheim and Taubman seeking comment weren't returned.
_ With assistance from Aaron Kirchfeld in London.