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IFX - Infineon Technologies AG News Story

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Sector
Technology
Size
Large Cap
Market Cap £35.44bn
Enterprise Value £38.65bn
Revenue £8.61bn
Position in Universe 36th / 1053

Infineon's Cypress deal may land advisers $95 million fee bonanza

Mon 3rd June, 2019 6:54pm
By Pamela Barbaglia
    LONDON, June 3 (Reuters) - Banks including Morgan Stanley
 MS.N  and JP Morgan  JPM.N  are set for a $95 million windfall,
their most lucrative payday so far this year for a deal
involving a European company, after Infineon's  IFXGn.DE  swoop
on Cypress Semiconductor  CY.O .
    The German company's $10 billion deal with Silicon
Valley-based Cypress will boost Infineon's presence in
next-generation automobiles and Internet technologies, creating
an automotive leader with a 13% market share.  urn:newsml:reuters.com:*:nL8N23A0LS
    But while investors have expressed concern over the hefty
price tag, the banks that engineered the deal are celebrating a
much-needed pay boost after M&A activity in Europe plunged 67
percent in the first quarter of 2019.  urn:newsml:reuters.com:*:nL1N21E226
    A pick-up in multi-billion dollar deals in Europe, which
began in May with Nestle's  NESN.S  $10 billion sale of its skin
health unit to buyout fund EQT, will mean a much-needed fee
boost for some banks, who are typically paid on a success basis.
    Morgan Stanley, which acted as exclusive adviser to Cypress,
is expected to earn fees of between $45 million and $55 million
for its role, Freeman Consulting estimates.
    On the other side of the negotiating table, Freeman
estimates Credit Suisse  CSGN.S , JP Morgan and Bank of America
 BAC.N , could share fees of between $30 million and $40 million
for advising Infineon and providing committed financing.
    
    GOLDMAN ON TOP
    But there will be no reward for Germany's Deutsche Bank,
which did not secure any role in the Infineon transaction
despite previous work for the German firm. 
    Germany's biggest bank advised Europe's biggest chip-maker
in 2010 on the sale of its wireless business to Intel, but has
been left empty-handed on recent deals, including its $3 billion
purchase of California-based International Rectifier in 2014.
    Investment banks working on global mergers and
acquisitions(M&A) have seen fees drop by 15% so far this year to
$11 billion compared to the same period in 2018, Refinitiv data
shows.
    Fees related to all investment banking activity, including
equity and debt capital market transactions, are down 17% so far
this year to $37.5 billion, Refinitiv data shows.
    Goldman Sachs has so far topped the global M&A league
tables, with a 38.5% market share followed by JP Morgan and
Morgan Stanley, after advising Fiat Chrysler  FCHA.MI  on a $35
billion merger with France's Renault  RENA.PA .  urn:newsml:reuters.com:*:nL8N2330HI
    Combined with Nestle's 10.2 billion Swiss franc skin health
deal, the two transactions could earn banks $65 million in fees,
Freeman says, with up to $50 million likely to go to the lead
advisers on the Nestle disposal.  urn:newsml:reuters.com:*:nL5N22S0RS
    Despite its size, Fiat Chrysler's proposed tie up with
Renault is only worth up to $15 million in overall fees, Freeman
said, pointing to the French government playing a bigger role
than the banks in determining its fate.  

 (Reporting by Pamela Barbaglia;
Editing by Alexander Smith)
 ((pamela.barbaglia@thomsonreuters.com;  +442075427723; Reuters
Messaging: pamela.barbaglia.thomsonreuters.com@reuters.net))
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