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Billionaire Warren Buffett decided he did not need investment bankers when he negotiated his rapid takeover of Burlington Northern Santa Fe Corp [BNI
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]even as the railroad was represented by veteran banker Roger Altman's boutique firm Evercore [EVR
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]as well as Goldman Sachs[GS
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].
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Getty Images Warren Buffett |
The $26 billion deal pushes Evercore -- which advised Burlington alongside M&A juggernaut Goldman Sachs -- up the closely followed league tables.
It will also give the pair a sweet payday with estimated fees of $50 million to $55 million, according to data from Thomson Reuters and Freeman Consulting.
Tentatively agreed on Halloween, the deal took only nine days in total to come together, a source familiar with the deal said. It was presented to the boards and signed late on Monday night.
Despite the rapid pace and the mammoth dollar amount involved, Buffett's Berkshire Hathaway [BRK.A
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][BRK.B
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] didn't use a financial advisor, according to a source familiar with the deal.
Buffett often sees no need to hire investment bankers for his deals, but it is perhaps surprising that the firm decided not to use any for such a huge deal.
This time he did not use his favorite investment banker Byron Trott, who opened his own shop in March. Buffett has described Trott as a banker he trusts completely.
Buffett was already intimately knowledgeable about Burlington, as Berkshire had begun amassing Burlington shares by the third quarter of 2006, regulatory filings show.
Time wasn't wasted in negotiating. According to the source, the $100-a-share price of the agreed-upon deal was Buffett's original offer.
For Evercore, it shoots them up the league table and gives them even more prominence. It has moved from number 12 to 10 in the worldwide financial advisory rankings, according to Thomson Reuters data.
The advisor has also jumped from No. 6 to No. 4 in the U.S. target financial advisory rankings, muscling past Citi [C
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]and Bank of America Merrill Lynch [BAC
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].It now sits behind the top three U.S. target advisers - Morgan Stanley [MS
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], Goldman Sachs [GS
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]and JPMorgan [JPM
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], according to Thomson Reuters data.
Veteran Banker
Working on the deal was Altman himself, who spent 20 years as an investment banker for Lehman Brothers and Blackstone Group [BX
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]. Altman was also a Treasury official with the Carter and Clinton administrations.
The deal shows it can pay to lure bankers from bigger rivals. Leading the deal alongside Altman was senior managing director George Ackert, who joined Evercore in February from Bank of America Merrill Lynch, where he was global head of transportation and infrastructure.
Boutique firms have taken advantage of worries about pay and other restrictions at top investment banks to woo away key bankers, increasing the pace of a trend that was apparent even before last year's financial crisis.
Evercore, founded in 1996 by Altman, has been particularly active in gaining M&A advisory work this year.
It advised the Special Committee of the Board of Directors of Affiliated Computer Services [ACS
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] on its pending sale to Xerox [XRX
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] and advised Wyeth on its $68 billion union with Pfizer [PFE
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].
However, the assignment didn't move Goldman Sachs' position, which remains at No. 2. The Goldman bankers leading the deal were Marc Nachmann and Dusty Philip.
Legal advisers on the deal on the Burlington side were New York-based Cravath Swaine & Moore, while Berkshire Hathaway used California-based law firm Munger, Tolles & Olson LLP.
Deal volume for November, at $44.5 billion, has already surpassed the $28.6 billion volume for all of October, when calculating U.S. targets, Thomson Reuters data shows.
That includes Stanley Works' [SWK
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] deal on Monday to buy rival toolmaker Black & Decker [BDK
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] for $3.46 billion stock.
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Data is a real-time snapshot *Data is delayed at least 15 minutes