WALL STREET PAYDAY: Banks could pull in half a billion in fees from CVS-Aetna deal

  • The $US69 billion CVS-Aetna deal could generate more than half a billion in fees for Wall Street investment banks.
  • The latest in a wave of megadeals is another big win for Goldman Sachs, as well as a handful of independents.

On Sunday, CVS Health agreed a deal to buy insurance giant Aetna in a $US69 billion deal. The bankers who spent their weekend closing the transaction, the latest in a wave of megadeals, stand to earn a colossal amount of fees for their firms.

Between advising on the transaction – which could generate significant regulatory scrutiny – and arranging more than $US40 billion in financing, seven banks could split more than $US500 million if the deal closes.

It’s a big win for Goldman Sachs, which advised CVS on the deal along with Barclays and boutique Centerview Partners. The banks will split $US100 million to $US125 million, according to Jeffrey Nassof, director of consulting firm Freeman & Co.

Goldman Sachs, along with Evercore Partners, is also representing Qualcomm, which is fending off a $US130 billion takeover attempt by Broadcom in what would be the largest tech tie-up in history.

It’s also another big win for boutiques and independents, with three independents advising Aetna: Lazard, Allen & Co., and Evercore will also split $US100 million to $US125 million, according to Nassof.

The $US250 million tab is the second-biggest payday of the year for advisory fees on an announced deal, according to Nassof, following only the Broadcom-Qualcomm transaction, which is very much in limbo.

The Aetna-CVS deal will also require an enormous amount of financing, where Goldman Sachs once again wins big. Along with Barclays and Bank of America Merrill Lynch, the firm will share in as much as $US150 million for arranging the $US45 billion bridge loan, and the underwriters could see another $US200 million for placing some $US40 billion in long-term bond financing, according to Nassof.

All told, that’s potentially $US600 million in advisory and financing fees from one deal.

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