The government shot down Sysco’s $US3.5 billion takeover of US Foods, and it’s going to cost Goldman Sachs.
Goldman was the lone advisor on either side of the deal. The bank stands to lose more than $US35 million in deal fees it had been expecting since 2013 after Sysco decided to walk away from its offer to buy US Foods.
Goldman did $US34.5 billion in revenue last year, so it’s not like this lost deal is going to destroy the company. But, it still stings to lose out on $US35 million.
Sysco will give up more than $US300 million in the form of breakup fees and instead of chasing more big M&A, will do $US3 billion in share buybacks.
This is the second mega-deal to be scotched by regulators this year. The other deal to be killed was the $US45 billion Time Warner Cable-Comcast merger, which was nuked in April.
But when the Time Warner Cable-Comcast deal went to pieces, it was almost every other bank on Wall Street but Goldman that lost out. Because Goldman Sachs was advising Charter Communications, it will likely profit from the transaction falling apart. Charter was only able to swoop back in to make a successful bid for Time Warner Cable because Comcast was forced to walk away from its deal.
As early as tomorrow, we’ll see Wall Street’s league tables for the first half of 2015. Right now, the M&A market is booming and tracking all-time highs not seen since 2007. Goldman Sachs typically tops big bank league tables for global M&A, so losing out on the food distributors’ merger might not be that big of a deal in the long run.