Goldman extends M&A lead after Reynolds appointment

By Christopher Spink

Nov 1 (IFR) - Reynolds American (NYSE: RAI - news) 's appointment of Goldman Sachs as sole adviser to a panel of independent directors in relation to a takeover approach by British American Tobacco (Kuala Lumpur: 4162.KL - news) should extend the US bank's commanding lead in the announced M&A league tables.

Last month, Goldman's lead narrowed after nearest rival Morgan Stanley (Xetra: 885836 - news) was appointed by Time Warner (Frankfurt: A0RGAY - news) alongside Allen & Co and Citigroup (NYSE: C - news) to defend the US$85bn approach for the cable company from telecoms group AT&T (Sao Paolo: ATTB34.SA - news) . Goldman has no role on that deal.

But the situation is reversed in the Reynolds possible transaction. BAT has made a US$46.5bn offer to acquire the 57.8% stake in its US rival that it does not already own, and is advised by Centerview, Deutsche Bank (LSE: 0H7D.L - news) and UBS (LSE: 0QNR.L - news) .

Reynolds appointed advisers late on Monday. Goldman Sachs (NYSE: GS-PB - news) will lead advice to a transaction committee consisting of independent directors not designated by BAT.

Goldman arguably has a more challenging role in considering alternatives for shareholders than JP Morgan and Lazard (Frankfurt: A0DQP8 - news) , who have been appointed to advise Reynolds on the approach. Morgan Stanley is not involved in any of the groups.

So far only Lazard has been credited by Thomson Reuters (Dusseldorf: TOC.DU - news) with league table credit for the Reynolds' proposal. If the other two banks also get the US$57bn up for grabs, then Goldman Sachs would have advised on US$745bn of announced deals so far this year, giving it a US$112bn lead over Morgan Stanley. Third-placed JP Morgan would be US$16bn behind Morgan Stanley.

(Reporting by Christopher Spink)