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Advisors could reap $166 mln in fees from Chemchina's Syngenta deal

Reuters - UK Focus

By Anjuli Davies

LONDON, Feb 3 (Reuters) - Fees from ChemChina's agreed $43 billion bid for Swiss seeds and pesticides group Syngenta could provide a $166 million payday for the advisors, according to estimates from Thomson Reuters (Dusseldorf: TOC.DU - news) and Freeman Consulting.

For the largest ever foreign purchase by a Chinese firm, ChemChina was advised by HSBC and China CITIC Bank International.

They could share spoils of between $65 to $95 million in fees, according to the estimates.

On the other side of the table, Syngenta (LSE: 0QOP.L - news) was advised by Dyalco, the one-man business of former Goldman Sachs (NYSE: GS-PB - news) investment banking co-chairman Gordon Dyal, alongside JP Morgan, Goldman Sachs and UBS (NYSEArca: FBGX - news) .

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Their fees could range from between $59 and $71 million, with the lion's share going to lead advisors.

"Our deal fees are based on similar transactions of the same size range, but we do take into account the deal specifics such as cross-border versus domestic acquisitions, and the fact this is a Chinese company making a mega acquisition outside of China," said Lam Nguyen, director at Freeman Consulting.

"Those two made our estimates higher than a normal domestic acquisition."

In general fees for those advising a buyer are typically less than for those banks advising the seller, but Freeman estimates that because this is a cross-border acqusition with several hurdles to clear before a deal is closed, fees could be higher.

For deal financing, ChemChina would need to pay around 0.4 to 0.8 percent of the amount to be borrowed either via bond issuances, loan packages or a combination of both, according to Freeman estimates.

ChemChina has secured financing commitments from HSBC, China Citic (HKSE: 0267-OL.HK - news) and other Chinese banks sufficient to acquire 100 percent of Syngenta, a source with direct knowledge of the deal has said.

The deal would be the biggest ever Chinese-involvement M&A deal, as well as the biggest outbound M&A deal on record, and the biggest targeting Europe, according to Thomson Reuters data. (Editing by Greg Mahlich)