For Verizon advisers, huge payoff after waiting a decade

It has been a 10-year-long wait for bankers advising Verizon Communications Inc on its $130 billion deal to take complete control of Verizon Wireless, but their patience will yield both handsome fees and bragging rights.

Bankers, including Paul Taubman, Alan Schwartz, Andrew Decker and James Ferency, were among the advisers that Verizon used back in 2004, when it first came close to buying out Vodafone Group Plc's 45 percent stake in the No. 1 U.S. mobile carrier,

The deal, the third-largest corporate acquisition of all time, is estimated to generate M&A advisory and financing fees of around $500 million and catapult Guggenheim, an independent financial services firm, to the 10th position from 42nd in the global rankings of M&A advisers.

It will also seal the lead of Goldman Sachs Group Inc , Bank of America Corp and JPMorgan as the top three M&A advisors globally, according to Thomson Reuters data.

JPMorgan, Morgan Stanley, Barclays Plc and Bank of America also advised Verizon and arranged the financing for the deal. Goldman Sachs Group Inc and UBS AG are advising Vodafone.

The banks are expected to split total advisory fees of $200 million to $250 million, with about $110 million to $125 million paid by Verizon Communications, and $100 million to $118 million paid by Vodafone, according to financial services firm Freeman & Co estimates.

Banks would also earn fees for arranging the financing. Fees for loan syndication could be around 0.2 percent to 0.4 percent of the amount raised. For money raised through bonds, fees would be 0.3 percent to 0.8 percent, according to Freeman.

Taubman, the former Morgan Stanley banker, was one of the key negotiators for Verizon, although it was not clear how much of the fee pool he would take personally.

In a sign of the importance of the deal to banks, JPMorgan Chief Executive Jamie Dimon and Morgan Stanley's top dealmaker Robert Kindler also got personally involved. Last week, before a Verizon board meeting Dimon, Kindler, Schwartz and Taubman talked about the time it had taken for the deal to come together.

Kindler and Dimon joked how Morgan Stanley had signed the engagement in 2004 when Taubman was still at the bank, while JPMorgan inherited the advisory role from Bear, thanks to the work done by Schwartz and his team at the time.

RIGHT PRICE

The news of Verizon's latest effort was first reported by Reuters in April. At the time, sources said Verizon was contemplating a $100 billion cash and stock bid. Verizon was ready to push aggressively but preferred a friendly deal.

The renewed attempt came as Verizon, which led the U.S. pack in wireless customer growth and profitability, needed new ways to grow. The U.S. market has been slowing because most people already own smartphones and competition has been intensifying.

Record low interest rates, thanks to the U.S. Federal Reserve's unprecedented policy of easy money, also meant that financing for such a large deal would be cheap. Verizon is raising $61 billion in bridge loans for the deal.

"At some point in the future, where Vodafone turns around, and says, 'OK now we're ready,' Verizon may be off to do something. Interest rates may be different," a source said in April. "This is a moment in time, we should not pass."