Marconi Spends $200M in Banking and Legal Fees
Byline: James Rossiter and William Hutchings
Marconi, the UK telecom equipment group, has spent an estimated $200m (e226m) in investment banking and legal fees since its transformation from the old General Electric Company conglomerate in 1996, according to analysis by Financial News.
The fees, which are a conservative estimate, were paid to transform the company into a telecoms equipment company which has seen its share price fall more than 95% in less than a year.
Since October 1996, when Lord Simpson took over from Lord Weinstock as chief executive, Marconi has leant on its bankers for advice on over $23bn of M&A deals and equity sales. These include the $11bn sale of its aerospace and defence business and the $3.5bn acquisition of FORE Systems, a US technology company, in 1999.
Morgan Stanley, UBS Warburg and JP Morgan have earned the lion's share of these fees along with Credit Suisse First Boston, Marconi's broker. The banks advised on 28 M&A deals in this period, with a total deal value of over $25bn, according to data from Dealogic.
Fees have been calculated on the assumption that banks charged an average rate of 0.75% for the majority of those transactions worth a few hundred million dollars. Five larger deals will have levied a charge rate of 0.5% or less.
Marconi paid over $30m in fees on equity sales, including the sale of its stake in Alstom. Marconi has spent almost e25m on debt financing fees in the past 18 months, a large chunk of which has gone to Morgan Stanley.
The company will have spent atleast a further $50m in legal fees over the past five years, according to sources close to Marconi. …