Smithkline And Glaxo Could Face 00 Million Bill

Glaxo Wellcome and SmithKline Beecham could face a bill for fees and costs of up to £400 million if their merger goes through. The fees would be split between a wide range of advisers, with much going to law firms for the extensive due diligence and regulatory approvals needed on both sides of the Atlantic. But the top names on each side are the investment banks, Morgan Stanley for SmithKline and Lazard Brothers/Lazard Freres for Glaxo. I think they could be sharing £100 million, said Philip Healey, editor of Acquisitions Monthly magazine. Neither bank would talk about fee structures. Another banker noted that fees were increasingly subject to negotiation, but added: When the whole history of a corporation is at stake, youre unlikely to find people nit-picking. They want the best advisers they can get. For the banks, the fees bonanza has a darker side: who would end up as chief financial adviser to the merged company? Morgan Stanleys pre-eminence in pharmaceutical deals and its status as a global integrated securities house has to be set against Lazards long association with Glaxo. It is conceivable that both could find a role, more likely than if Goldman Sachs or Merrill Lynch were on the other side from Morgan Stanley. But an investment banker said: Its hard to see them having more than one strategic adviser. Among other advisers, Glaxo has Hoare Govett Corporate Finance as stock- brokers. SmithKline has Cazenove and Credit Suisse First Boston de Zoete, the firm that CSFB bought recently from Barclays.