Magazine article American Banker

Hostile Bid for German Firm Highlights Line between Commercial, Investment Banks

Magazine article American Banker

Hostile Bid for German Firm Highlights Line between Commercial, Investment Banks

Article excerpt

Despite talk about investment and commercial banks being able to compete in each other's business lines, the world's biggest-ever hostile takeover battle suggests that traditional roles are not being abandoned.

The institutions advising Vodafone AirTouch PLC on its $135 billion unsolicited bid for the German wireless provider Mannesmann AG, resembles a who's who of established investment banks, including No. 1 ranked Goldman Sachs Group Inc..

Meanwhile, U.S. commercial banking companies are notably absent even though they have been trying to gain a presence in this highly profitable area of investment banking.

Instead, these institutions are fulfilling their historic role -- as lenders in a $34 billion syndicated loan that will help Vodafone finance its bid.

Citigroup Inc. and Bank of America Corp. are joining Goldman Sachs and Barclays Bank PLC as the four institutions lead managing the loan, which is priced at 70 to 80 basis points over the London interbank offered rate, according to market sources.

The distinction between the advising teams and the lenders underline the distance U.S. commercial banks still have to make up in investment banking, analysts said.

"This deal is far too important for Mannesmann and Vodafone to take risks on unproven players," said Paul Cantwell, a partner in the financial services practice of Andersen Consulting in London. …

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