Peter Shearlock says, with deals still to be completed, things could change but Goldman Sachs and Morgan Stanley Dean Witter are unlikely to be toppled.
With eight of the year's top 14 cross-border deals still to complete, The Banker 's international advisory league tables still have something of a provisional feel to them. Crediting banks with deals completed up to the end of September, they make no allowance for the spate of closings in early October.
Most significantly, those included the merger of Sweden's Telia with Norway's Telenor - a deal worth $16bn to Goldman Sachs, JP Morgan, Merrill Lynch and HSBC - which had been the cliffhanger of the early autumn but which was still awaiting final approval by the Norwegian government as The Banker went to press.
But the tables confirm the duopoly of Goldman Sachs and Morgan Stanley Dean Witter (MSDW), both of whom, uncannily, scored 88 international deals in the nine months worth around $214bn. Goldman has a more extended lead over MSDW in the cross-border league table - despite losing out when the $6.5bn bid for Italian fashion house Gucci, launched by France's LVMH, was frustrated by the combination of a poison pill and the Dutch courts. CSFB and ABN Amro acted alongside Goldman for LVMH.
Morgan Stanley and Donaldson Lufkin & Jenrette (DLJ) get credit for the successful defence of Gucci. Big European deals dominated the third quarter. Figures from Thomson Financial Securities Data show that European M&A volume topped that of the US for the first time in the July-September period - accounting for 48 per cent of the world total.
The value of announced deals during what is normally a quiet period for Europe almost doubled in the second quarter. Whether the fourth quarter will see that trend maintained is another matter given the current performance of world equity markets.
Nonetheless, the list of businesses for sale continues to lengthen - particularly in the oil, media and consumer industries. As examples, Repsol-YPF has just announced a $2.5bn disposal programme, while CSFB has been retained to sell the US natural gas and electric power business of Norway's Statoil. As the Tabacalera/Seita and Veba/Viag mergers demonstrate, European consolidation still has a long way to go. Of the bigger deals announced in the third quarter, France produced more than its fair share.
The biggest was the $54bn oil merger between Elf Aquitaine and TotalFina, which counts as a French domestic transaction, even though TotalFina is the result of a Franco-Belgian merger. The deal, which still awaits the approval of the European Commission, will be a league table maker for the advisers involved: Goldman, MSDW, Lazard Freres, BNP and Crédit Agricole Indosuez for Elf Aquitaine, and CSFB, Merrill Lynch and Paribas for TotalFina. MSDW will also be relieved to see that the $18bn Carrefour/Promodes supermarkets merger, which it has been promoting to the international investor community, went through without a hitch.
That deal will also give a boost to Société Générale and Rothschild. The latter, however, is one of a number of European houses to have skidded out of the top 10 for all international deals - though its role advising Rhone Poulenc (alongside Goldman) in its $26.5bn merger with Hoechst could alter by the year-end. Rothschild is also in the Carrefour/Promodes deal and is advising National Grid of the UK on its $4bn takeover of New England Electric. Deutsche remains in one of the two top 10s.
It is one of the advisers acting for BOC in its $11bn sale to Air Products/Air Liquide and is mandated in the Linde/Aga transaction (worth $3.5bn) and the Reckitt & Colman/Benckiser deal (worth $3.2bn). The Europeans which seem to have slipped from sight include Warburg Dillon Read and Schroders, once an ever-present but now a lowly 17th. Warburg continues to cling on in the top 10 cross-border advisers and has won some high-profile mandates of late. Its biggest pending international deal is the $7.3bn sale of the outstanding 49 per cent of Tracetebel to Suez Lyonnaise des Eaux.
But the continuing question marks over its future ownership cannot be helpful. Schroders, however, is finding it ever more difficult to pick up the big mandates. The newly integrating Lazard houses have held on to sixth place in the all international deals table (thanks, in the main, to client BNP, which successfully took over Paribas but failed with Société Générale) but are now 11th in the cross-border rankings. The firm looks as if it will have a good fourth quarter, however. It jumped to fifth in Commscan's table for worldwide deals announced in the July-September period.
In additon to its role in the TotalFina/Elf Aquitaine deal, it is acting for Hoechst in its merger with Rhone Poulenc, for Merita Nordbanken in its bid for Norway's second largest bank, Christiania, and for Fiat offshoot New Holland in its takeover of America's Case Corporation. In October, Lazard Freres was appointed by Calvin Klein to consider strategic alternatives: LVMH, which lost out over Gucci but then hoovered up Prada, was quick to declare its hand as a potential bidder.
The European names that have departed from the table have been replaced by the likes of DLJ and Chase. Both have been boosted this year by their roles in the $34bn Olivetti takeover of Telecom Italia and it has yet to be proved whether they have staying power. DLJ has certainly carved itself a niche in the insurance industry, acting for Aegon, Fortis and, of course, its parent company, Axa, in several billion dollar-plus deals.
It is also acting for Australia's AMP in its long-running acquisition of Britain's National Provident Institution, a deal worth $4.5bn. Two US houses that clearly do have the staying power are Merrill Lynch and JP Morgan. Merrill's tally of completed international deals in the third quarter rivalled that of either Goldman or MSDW. It acted for Paribas in its successful defence to the BNP bid and on behalf of Swiss pharmaceuticals concern Roche in its acquisition of the remaining one third stake in US biotech business Genentech.
That surge of completions pushed it from fifth position in the all international deals table at the mid-year to third at the ninth months. Its list of pending deals suggests it is finally getting the share of European mandates that its position in debt and equity underwriting would justify. Among others, it is acting for the Norwegian government in the Telia/Telenor deal, for Dutch publisher VNU in acquisitions and disposals worth $3.7bn, for Benckiser in its deal with Reckitt & Colman, and for Cable & Wireless in its cable TV and mobile telephony disposals worth a combined $24bn.
JP Morgan also jumped one place in the all international deals table, to fourth, and leapfrogged both Merrill and CSFB in the cross-border table - coming third. Its list of pending international transactions is, if anything, more impressive than Merrill's. It is in the Hoechst/Rhone Poulenc, Veba/Viag and Tabacalera/Seita mergers, in the Air Products/Air Liquide bid for BOC, the Volvo/Scania transaction, the merger of municipal lender Dexia France with Dexia Belgium and is acting for HSBC in its acquisitions of Republic Bank of New York and Safra Republic Holdings of Luxembourg.
If all the billion dollar-plus international deals with which it is involved closed this quarter, they would add more than $100bn to JP Morgan tally for the year. CSFB is now a confirmed fifth in both our tables. But it, too, has a mountain of pending deals. One of the big international ones is the planned three-way get-together in aluminium between Alcan of Canada, Pechiney of France and Algroup of Switzerland - worth $9bn. That deal has not prevented it from taking an advisory role in Alcoa's counter-move for Reynolds Metals, a deal announced just hours after the Alcan/Pechiney/Algroup merger plan.
Regulatory issues abound in both deals. Salomon Smith Barney and Lehman Brothers continue to hold their own in the tables, though Lehman is only a whisker ahead of 11th placed Lazard in the cross-border rankings. Salomon has an interest in the world's largest ever corporate takeover - the $115bn MCI Worldcom acquisition of Sprint.
Among pending international deals, it is acting for Arco in its $33bn takeover by BP Amoco and for Bermuda-registered Global Crossing in the bid from US West. It is also advising France Telecom on its $5.5bn investment in NTL of the US, which has provided the platform for NTL's $13bn acquisition of Cable & Wireless's consumer cable telephone and television interests in the UK.
It has also been appointed by Australia's Broken Hill Proprietary to auction the group's US steel businesses, worth $1bn-plus. Lehman is waiting to close the $11bn One2One sale to Deutsche Telekom but its name is otherwise absent from the top half of our billion dollar-plus cross-border deals list. The firm did play a pivotal role in putting together the $14bn Veba/Viag merger to create Germany's number one electricity power generator.
