By Freya Berry and Sinead Cruise
LONDON (Reuters) - Royal Dutch Shell (LONDON:RDSa)'s $70 billion takeover of British energy firm BG stands out because only two investment banks and a boutique firm were selected for the advisory work.
This is in sharp contrast to many so-called mega-deals, which have historically involved at least two and sometimes three or four financial advisers to each party.
Shell's cash and share offer, recommended by the board of BG on Wednesday, represents a coup for Bank of America Merrill Lynch (NYSE:BAC), as Shell's sole adviser. It is also a significant payday for Goldman Sachs (NYSE:GS) and advisory boutique Robey Warshaw LLP, the firms hired by BG.
To keep talks between Shell and BG confidential, the list of advisers was intentionally kept short, one source familiar with the deal said, even though this meant Bank of America Merrill Lynch underwriting Shell's borrowing alone.
This compares with Vodafone's $130 billion sale of its 45 percent stake in Verizon's U.S. wireless business in 2013 which earned big fees for Goldman Sachs, Bank of America Merrill Lynch, JP Morgan, Morgan Stanley (NYSE:MS), Barclays (LONDON:BARC), UBS, Paul Taubman's PJT Partners and Guggenheim Partners.
And nine banks shared the spoils when Glencore (LONDON:GLEN) took over Xstrata in 2012, while seven are handling the merger of Holcim (SIX:HOLN) and Lafarge (PARIS:LAFP) and related asset sales.
None of the parties involved have provided details on their likely earnings from the BG deal but the figures will affect league tables for fees and deals activity in the first quarter of next year, if not sooner, given the small number of advisers on the big-money ticket.
Merrill Lynch was already the top bank by fees and market share for the energy and power sector in the first quarter of 2015, with a 7.9 percent share, according to Thomson Reuters data. The bank came fourth for global mergers and acquisitions in terms of fees.
Goldman was at number one, after boosting its fee intake by 40 percent against the same period last year.
Investment banking fees for the energy and power sector reached almost $2.4 billion, the third most lucrative sector globally for the quarter.
Robey Warshaw's role deals another blow to major bulge-bracket banks, coming just weeks after independent investment banks Lazard and Centerview Partners LLC saw off bigger rivals to advise H. J. Heinz and Kraft Foods (NASDAQ:KRFT) on a $46 billion merger.
The company began operations just last year under its two star dealmaker founders -- Simon Robey and his namesake Simon Warshaw.
Dealmakers across the City are now expected to try to flush out possible counter bidders to defend their positions in the league tables, which help companies select which banks and advisers they want to spearhead takeovers and share offerings.
"BG has long been mooted as a potential target for a number of predators. It is not inconceivable that this deal flushes out a counter offer for BG," one of BG's 15 largest investors told Reuters.