Banks could reap as much as 115 million in fees from IBM-Red Hat deal
IBM unleashed the over the weekend, and if closes, the bankers who helped orchestrate the acquisition could reap as much as 5 million in fees.
On Sunday IBM announced it was paying 0 a share for Red Hat — best known for selling open-source Linux software for enterprise computing infrastructure, app development, and cloud management — a 60% premium from the company's closing stock price on Friday, which has been battered amid the ongoing market turmoil.
Guggenheim and Morgan Stanley, Red Hat's advisers, are set to split an estimated million to million in fees for working on the deal, according to Jeffrey Nassof, the director of the consulting firm Freeman &Co.
IBM'sadvisers—JPMorganChase,GoldmanSachs,andLazard— are expected to split an estimated million to million, Nassof said.
That doesn't include fees for financing. Depending on how IBM pays for the deal, banks that underwrite the debt would be in line for another hefty payday.
In a year that has already been hot for tech mergers and acquisitions, this tie-up tops the chart.
Through the first three quarters of the year, banks pulled in about billion in revenue from tech M&A globally, far outpacing any other sector, according to data from Dealogic. Healthcare was a distant second at less than billion.
The IBM-Red Hat deal, which is the largest tech buyout since Dell paid billion for data-storage giant EMC back in 2015 and the largest software deal ever, could boost that tally even further if the deal closes.
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