This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Greenhill Surges on Actavis Takeover of Forest Labs

NEW YORK (TheStreet) -- If, as the saying goes, investment bankers "eat what they kill" then the financiers at Greenhill & Co. (GHL - Get Report) are in for a long-overdue feast. Shares Greenhill surged more than 8% in early trading on Tuesday, after the boutique investment bank acted as adviser to Actavis (ACT) in its announced $25 billion takeover of Forest Laboratories (FRX).

The advisory mandate is a major coup for Greenhill, which has struggled amid a corporate merger and acquisition landscape that remains below pre-crisis levels and has been tempered in recent years by market volatility, political uncertainty and C-suite caution.

Advising Actavis in its biggest-ever deal, a cash-and-stock takeover of branded drug-maker Forest Labs, will help boost investor confidence in the advisory boutique. The deal may also prove important to Greenhill's bottom line.

According to Freeman Consulting Services, a boutique consulting and research firm, fees paid by Actavis to its advisers are expected to be between $50 million and $59 million. Greenhill is listed as Actavis' financial adviser, while law firm Latham & Watkins is the company's legal adviser. For context, a fee in excess of $50 million on the Actavis deal would represent over 15% of Greenhill's 2013 revenue.

Must Read: Actavis Stakes $25B on Branded Drugs With Forest Buy

Fees paid to Forest Labs advisers are forecast by Freeman & Co. to come in at between $55 million and $65 million. JPMorgan is Forest Labs legal adviser while Wachtell, Lipton, Rosen & Katz is its legal adviser.

Greenhill's shares were rising to $52.81 in early Tuesday trading on news of the deal and the firm's involvement.

Hedgeye Research analyst Jonathan Castelyn said on Twitter the mandate was a step in the right direction for Greenhill. Excluding dividends, shares in Greenhill have fallen 13% over the last 12 months.

Actavis also has bridge loan commitments from BofA Merrill Lynch and Mizuho Bank pending execution of its final financing plans, the company said. (Freeman Consulting Services didn't have number on fees that Actavis might pay to banks underwriting debt as part of the cash and stock offer). Typically, those arranging fees could be around 2% to 2.5% of the total amount for bonds or loans issued by a company.

In the merger, shareholders of Forest will receive 0.3306 a share of Actavis common stock and $26.04 in cash for each share of their shares. The deal will include an election mechanism for Forest shareholders to elect all-stock or all-cash consideration, with the stock consideration expected to represent a tax-free exchange.

Forest shareholders are expected to own approximately 35% of the combined company on a pro forma basis.

Actavis shares were rising more than 6% in early Tuesday trading to $204.56 a share. Forest Labs shares were trading higher by more 29% in early trading at $92.21.

Actavis $25B Forest Labs Deal Not Just About Carl Icahn

Actavis was Among TheStreet's Top 5 Corporate Dealmakers Heading into 2014

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
FRX $99.00 -0.77%
GHL $32.79 -2.06%
AAPL $109.27 -1.00%
FB $88.26 0.12%
GOOG $600.70 -0.92%

Markets

Chart of I:DJI
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASDAQ 4,683.9190 -49.5780 -1.05%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs