Goldman, BMO among banks to get fees for Nexen, Progress

PUBLISHED : Monday, 10 December, 2012, 3:07pm
UPDATED : Monday, 10 December, 2012, 3:07pm

Goldman Sachs, Bank of Montreal and other financial firms stand to claim as much as US$150 million in investment-banking fees after Canada approved the foreign takeovers of Nexen and Progress Energy Resources.

Canadian Prime Minister Stephen Harper on Friday approved Cnooc’s US$15.1 billion takeover of Nexen and Petroliam Nasional’s C$5.2 billion (US$5.3 billion) offer for Progress, clearing a key hurdle for closing the acquisitions of the Calgary-based companies.

Investment banks on both sides of Nexen’s takeover by Cnooc stand to make US$80 million to US$100 million in advisory fees, according to Lam Nguyen, a director at Freeman & Co., which specializes in mergers consulting in the financial industry. Freeman, based in New York, uses its own model to estimate bank fees based on deal size, industry and nature of the transaction.

Nexen estimates fees and expenses tied to the takeover to be about C$81.7 million, which includes fees to its financial advisers, Goldman Sachs and Royal Bank of Canada, the country’s largest lender, according to regulatory filings.
Cnooc is being advised by Bank of Montreal and Citigroup of New York. Those fees haven’t been disclosed.

The Progress-Petronas transaction was estimated to generate US$40 million to US$50 million in combined advisory fees, Freeman’s Nguyen said on Saturday.

Progress said estimated fees and costs from its takeover are not expected to exceed C$22.7 million, according to regulatory filings. The amount includes “employee obligations,” fees to Bank of Montreal’s BMO Capital Markets as its financial adviser and Bank of Nova Scotia for a fairness opinion, as well as legal fees and other costs, according to the July 20 filing.

Transaction costs for Petronas, which is being advised by Bank of America Corp.’s Merrill Lynch unit, haven’t been disclosed.

Spokesmen for the financial firms either declined to comment or didn’t respond to messages left after regular business hours.

Canadian companies have been involved in US$200 billion of announced takeovers this year, with Cnooc-Nexen the biggest and Petronas-Progress the fourth-largest, according to data compiled by Bloomberg. That has surpassed the US$182.6 billion of announced deals for all of last year, and matching the amount for 2010.

Royal Bank’s RBC Capital Markets unit is the top arranger for takeovers involving Canadian companies so far this year, according to data compiled by Bloomberg. Goldman ranks second, followed by BMO Capital Markets.