Boutique Banks Score Big as $39 Billion Sky Saga Nears End

(Bloomberg) -- As the contentious $39 billion takeover saga for Sky Plc draws to a close, boutique banks appear poised to reap some of the richest rewards.

PJT Partners Inc., Robey Warshaw LLP, Evercore Inc. and Centerview Partners are the small advisory shops that worked on the battle between Comcast Corp. and Twenty-First Century Fox Inc. for control of Sky. The protracted takeover effort -- kicked off in December 2016 when Fox offered to acquire the share of the British broadcaster that it didn’t already own -- neared culmination this weekend with Comcast outbidding Fox in a rare one-day auction.

Sky shareholders have until Oct. 11 to accept, but its independent directors have already recommended the deal, which is set to be the biggest British takeover this year, according to Bloomberg data. The high-stakes battle illustrates how U.K.-based targets, especially those with European and global operations, remain attractive to overseas buyers despite uncertainty surrounding the country’s Brexit negotiations to leave the European Union.

U.S. companies have more than doubled the amount they’ve agreed to spend on U.K. targets this year compared to the same period a year earlier, according to data compiled by Bloomberg. The American acquirers aren’t as concerned about Brexit as their European counterparts, and the decline in the value of the sterling since 2014 has made U.K. assets attractively cheap, according to a report on Monday by consulting and accountancy firm Moore Stephens.

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Morgan Stanley, PJT Partners and Barclays Plc stood to share a pool of as much as 61.5 million pounds ($80 million) in fees as Sky’s advisers, under the terms of an offer made by Comcast in the months leading up to Saturday’s frenzied bidding war. Robey Warshaw, Evercore, Bank of America Corp. and Wells Fargo & Co. were to split up to 37.8 million pounds for their work on behalf of the U.S. cable operator, according to that same proposal.

Ranked as the fifth-largest transaction globally so far this year, the deal could boost the banks’ positions in the so-called league tables, a fiercely contested list of the year’s top advisers that’s used to pitch for new business. Evercore, Lazard Ltd. and Centerview are among the top 10 advisers for dealmaking so far this year, according to data compiled by Bloomberg. In 2016, when Fox put things into motion, there were no boutique banks at the top aside from Lazard.

As the larger banks navigate to avoid conflicts of interest stemming from advisory roles through their many different types of services or their relationships with certain clients, boutique banks are stepping into the breach by using their focus on mergers and share sales as an advantage. Top executives often bring them on board to provide advice alongside the financing and capital-markets expertise of the larger financial institutions.

The smaller shops also typically rely on just a few key advisers, usually former bulge-bracket bankers, compared with the hundreds employed in the investment-banking divisions of their larger rivals. London-based Robey Warshaw, for instance, has only 15 staff members, including founding partners Simon Robey, Simon Warshaw and Philip Apostolides.

Fox’s bankers -- Deutsche Bank AG, Centerview and Goldman Sachs Group Inc. -- were set to share about 38.4 million pounds, according to a separate offer document posted by the U.S. media giant in July.

The final payout numbers from Sky, Comcast and Fox are still being crunched based on the winning bidders and losers that emerged over the weekend. But either way, a fee windfall is guaranteed.

©2018 Bloomberg L.P.