As we know, Heinz and Kraft are merging.
Warren Buffett’s Berkshire Hathaway and Brazilian private equity firm 3G Capital are behind the merger, which is likely to be one of the biggest M&A deals of the year.
So it’s kind of awkward for Wall Street that all the major banks were left out of the deal.
Boutique bank Lazard was Heinz’ sole advisor, while Kraft turned to Centerview Partners, a little-known banking advisory firm.
Both firms advised Berkshire and 3G when they teamed up to buy Heinz back in 2013. Now, Heinz has acquired Kraft for upward of $US40 billion.
And Wall Street may not be taking kindly to the news, judging by Deutsche Bank’s Gordon Gekko comment on Friday.
As The New York Times’ David Gelles notes, boutique banks and smaller advisors are gaining prominence for these kinds of deals, grabbing 18 per cent of business last year, up from 8 per cent back in 2008.
Of course, the reason no big-name banks were needed for this deal is there was no need for debt-financing. 3G and Berkshire Hathaway, which last year held more than $US4o billion in cash, had that covered. Together they’re funding a $US16.50-per-share dividend for Kraft shareholders, The Wall Street Journal’s Maureen Farrell reported.
Lazard also advised 3G Capital when it bought Burger King, and then, controversially, when Burger King bought Tim Hortons last year. The Journal’s Farrell said the two worked together on another deal as early as 2004.
Lazard could earn $US50 million-$US60 million from the deal, while Centerview could get between $US75 million and $US100 million, Bloomberg reported.
Not something we imagine Wall Street wants to hear.