Bayer, for instance, has struggled since digesting its Monsanto purchase, with its market value falling by more than US$45b since the deal. The acquiring company bears the cost of the fees paid by target companies to their advisers because they are ultimately buying the business that is making the payments.
There have been a number of blockbuster takeovers this year, including Bristol-Myers Squibb's purchase of biotech company Celgene for US$90b. JPMorgan advised Celgene on that deal and received US$100m for its work, alongside a payment of US$67m by Celgene to Citigroup. That transaction rivalled records for the largest gross sellside fees to a group of banks on a takeover.
There has been US$2.6 trillion of global mergers and acquisitions so far this year, according to Dealogic data. More than half occurred in the US, with US$1.4t worth of deals agreed. The pharmaceutical and healthcare sectors have been among the most active with US$479b worth of transactions announced.
JPMorgan sits in second place in global league table rankings for the total value of announced M&A deals it has worked on this year, behind perennial leader Goldman Sachs.
AbbVie chief executive Rick Gonzalez first approached his counterpart Brent Saunders at Allergan in mid-March and later in April before talks between the two companies sped up in May. In late May, Gonzalez disclosed the roles of his advisers at JPMorgan and law firm Wachtell Lipton Rosen & Katz.
AbbVie agreed to pay Allergan US$188 per share, with two-thirds of the consideration coming in cash and the remainder in stock. Shares in AbbVie, which was advised by Morgan Stanley, have fallen 16.4 per cent since the deal was unveiled on June 25, reducing the value of the stock portion of its offer.
The documents show that in its initial range AbbVie offered between US$174-$178.50 per Allergan share, eventually bumping the number to the US$188 figure after a series of discussions between Gonzalez and Saunders.
According to people with knowledge of the negotiations with AbbVie, the dealmaker most closely involved from JPMorgan was Steve Frank, chairman of healthcare investment banking, who has a longstanding relationship with Saunders from Allergan. The deal marks the second-time in four years that Allergan has agreed to be acquired and worked with JPMorgan.
A planned takeover of Allergan by US drugmaker Pfizer in 2015 fell through a year later when Barack Obama's administration took steps to scupper a deal which was designed to help Pfizer escape paying US taxes by capturing Allergan's Irish tax incorporation.
That deal valued shares in Allergan at US$363.63 or roughly half what AbbVie agreed to pay four years later, reflecting the difficulties the deal provided relief from a tumbling share price and attacks from a hedge fund pushing to divide his chief executive and chairman roles.
"Steve Frank and his JPM team in healthcare are a force of nature and have worked for years with Allergan on the strategic combinations that helped make the company what it is. That relationship banking over time yields high reward and should," said James Woolery, veteran dealmaker and head of M&A corporate at law firm King & Spalding.
A former member of Frank's team, Henry Gosebruch, joined AbbVie in 2015 and is its head of strategy.
Written by: Arash Massoudi and James Fontanella-Khan
© Financial Times
