Banks could reap as much as $115 million in fees from IBM-Red Hat deal

In
a year that has already been hot for tech mergers and
acquisitions, the IBM-Red Hat tie-up tops the
chart.
Reuters

• IBM’s
  $34 billion acquisition of Red Hat is the largest software
  deal in history. The bankers who helped orchestrate the
  acquisition are set to make as much as $115 million in fees.
• Through the first three quarters of the year, banks pulled in
  about $3 billion in revenue from tech M&A globally, far
  outpacing any other sector, according to data from
  Dealogic. 
• The IBM-Red Hat deal, which is the largest tech buyout since
  
  Dell paid $67 billion for data-storage giant EMC back in
  2015, could boost that tally even further if the deal
  closes. 

IBM unleashed the
largest software deal in history over the weekend, and if

its $34 billion buyout of Red Hat closes, the bankers who
helped orchestrate the acquisition could reap as much as $115
million in fees. 

On Sunday IBM announced it was paying $190 a share for Red Hat —
best known for selling open-source Linux software for enterprise
computing infrastructure, app development, and cloud management —
a 60% premium from the company’s closing stock price on Friday,
which has been battered amid the ongoing market turmoil. 

Guggenheim and Morgan Stanley, Red Hat’s advisers, are set to
split an estimated $50 million to $70 million in fees for working
on the deal, according to Jeffrey Nassof, the director of the
consulting firm Freeman & Co.

IBM’s advisers — JPMorgan Chase, Goldman Sachs, and Lazard — are
expected to split an estimated $35 million to $45 million, Nassof
said. 

That doesn’t include fees for financing. Depending on how IBM
pays for the deal, banks that underwrite the debt would be in
line for another hefty payday. 

In a year that has already been hot for tech mergers and
acquisitions, this tie-up tops the chart.

Through the first three quarters of the year, banks pulled in
about $3 billion in revenue from tech M&A globally, far
outpacing any other sector, according to data from Dealogic.
Healthcare was a distant second at less than $2 billion.

The IBM-Red Hat deal, which is the largest tech buyout since Dell
paid $67 billion for data-storage giant EMC back in 2015 and the
largest software deal ever, could boost that tally even further
if the deal closes. 

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