Morgan Stanley Takes Both Sides -- WSJ
13 September 2016 - 5:02PM
Dow Jones News
By Liz Hoffman
In a world where bankers will do almost anything to avoid
missing out on a big deal, Morgan Stanley's role in the
multibillion-dollar combination of Agrium Inc. and Potash Corp. of
Saskatchewan Inc. stands out.
The bank isn't just providing counsel to one side in the merger,
unveiled Monday. It is advising both.
In a highly unusual arrangement, Agrium and Potash jointly
retained Morgan Stanley to advise on their talks. A single
engagement letter covers its mandate as joint financial adviser,
and the two companies will split the bank's fee, according to a
person familiar with the matter.
Each is a longtime Morgan Stanley client. The bank advised
Agrium in its 2013 fight against an activist investor. It also
represented Potash in the failed takeover of a big German rival
last year. Both were the kind of in-the-trenches assignments that
engender loyalty and stickiness.
Banks typically have to pick and choose to avoid tangling up
their client relationships. Goldman Sachs Group Inc. famously drew
fire when it advised both sides in New York Stock Exchange's merger
with electronic trading firm Archipelago Holdings in 2005. Some
critics wondered at the time whether Goldman got either party the
best possible deal.
Goldman at the time nodded to possible conflicts but insisted
they could be managed. To address the potential for conflict,
Goldman was sidelined from negotiating the actual financial terms
of the deal, an odd setup that cast it as more of a corporate
consigliere and matchmaker.
Morgan Stanley's main man on the fertilizer deal was Richard
Robinson, a senior natural-resources banker who has known both
companies for years, the person familiar with the matter said.
The combination would create an industry powerhouse worth more
than $25 billion at current market prices.
The deal was billed as a merger of equals. Talks for such
combinations tend to be more collaborative than some outright
takeovers.
Yet sticking points often come up in the process of apportioning
ownership of the new company and dividing up management roles.
Investment bankers are expected to go to bat for clients on such
matters.
Both companies had additional banks that could presumably handle
tougher points of negotiation. The parties also hired a combined
six law firms on the deal.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
September 13, 2016 02:47 ET (06:47 GMT)
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