Lest we forget... lawyers, bankers cash in
BANKERS, spin doctors and lawyers working on the Melrose takeover of GKN are set to rake in more than £220million.
Some of the City’s biggest names including investment bankers RBC Capital and Rothschild, Lloyds Bank, and South African investment firm Investec will split a fees bonanza for work on the controversial deal.
Already critics have described the hostile takeover as an ‘abuse of capitalism’ that has seen the short-term interests of a few profiteering City firms defeating the longer-term concerns of other investors.
Paperwork shows advisers working for Melrose would have made £22million had the firm failed, but will pocket £139.5million if the deal is completed. GKN ran up close to £80million in fees trying to defend itself from the takeover, taking the total to almost £220million.
It brings the combined total that could be made by bankers, hedge funds and Melrose’s top four bosses to almost £680million.
Critics said bankers would be ‘licking their lips’ at the fees. The Unite union’s Steve Turner said: ‘The astronomical sums of money that will be pocketed would have Wall Street bankers licking their lips.
‘This is a bid that put a jackpot payday for a small number of people ahead of the long-
‘Astronomical sums of money’
term stability of a world-class engineering firm and the thousands of workers who make it a success.’ Yesterday, the Daily Mail revealed how hedge funds who targeted GKN had made an immediate killing of £172million as shares soared after investors backed the takeover.
Paperwork published by Melrose showed that its bankers Lloyds and RBC Capital – an arm of Royal Bank of Canada – will make up to £69million for financing arrangements, while RBC Capital along with 180-year-old French firm Rothschild and Investec will make up to £50million for broking advice.
Melrose’s lawyers Simpson Thacher and Bartlett could get up to £9million when the deal completes. Its public relations agencies including Mayfair-based Montfort Communications could get up to £5million.
GKN also ran up millions in fees, including £60million for bankers Gleacher Shacklock, JP Morgan and UBS, £12.3million for lawyers Slaughter and May, and £6.4million for PR firms FTI Consulting and Brunswick, run by Sir Alan Parker.
Melrose’s top four bosses – chief executive Simon Peckham, 55, chairman Christopher Miller, 66, vice-chairman David Roper, 67, and finance chief Geoffrey Martin, 50, could share a bonus pot of £285million if their plans post-takeover are successful. The four are entitled to generous bonuses based on the increase in price of Melrose’s shares.