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Centerview finding itself in middle of large M&A activity

Centerview Partners LLC has once again landed a spot on one of the year's biggest announced transactions.

Centerview has secured financial advisory roles on the four largest U.S. announced M&A bids in 2017 based on transaction value, which includes debt, according to S&P Capital IQ data. The private advisory-focused firm, founded in 2006, is no stranger to big deals. But it is noteworthy anytime an investment bank that is not one of the global universal behemoths becomes a regular on the biggest deals.

The most recent large assignment is a sell-side role on the Dec. 14 announced sale of 21st Century Fox Inc. to Walt Disney Co., a deal with a transaction value of about $77 billion. Centerview is also advising CVS Health Corp.'s board on a roughly $69 billion deal for Aetna Inc., and advising Qualcomm Inc., which received an unsolicited takeover bid that totaled about $130 billion from Broadcom Ltd., according to S&P Capital IQ data.

Of course, announcements do not always mean the deals will be completed. One of Centerview's big four deals this year — Emerson Electric Co.'s bid of around $30 billion for Rockwell Automation Inc. — is already off. So it is possible that all of four of these transactions end up in the M&A graveyard, as opposed to becoming prized deal tombstones for Centerview.

It is worth noting that Qualcomm and Broadcom never agreed to combine, and Emerson might not renew its pursuit of Rockwell. Meanwhile, the CVS/Aetna and Disney/21st Century Fox deals face regulatory approval hurdles. That said, deal terminations do not always mark the end of the relationships between investment banks and their clients.

For instance, Centerview was an adviser to 21st Century Fox on its 2014 announced acquisition of Time Warner Inc., a deal terminated later that same year. But in 2016, 21st Century Fox went back to Centerview, which advised on a pending deal for Sky plc.

Now, Centerview is advising 21st Century Fox on the Disney transaction and on the spinoff of the Fox Broadcasting network, which is set to take place ahead of the Disney deal's completion. Along with Centerview, Goldman Sachs & Co. LLC is listed as an adviser to 21st Century Fox on the terminated Time Warner deal, the Sky transaction, the Disney sale and Fox Broadcasting spinoff.

As part of the Fox Broadcasting separation, Goldman is providing the new company with a $9 billion bridge loan to help facilitate an $8.5 billion dividend payment to 21st Century Fox prior to the spin's completion. On the loan, Goldman Sachs could see a fee of $20 million to $27 million, according to Freeman Consulting Services.

The investment banks should also enjoy substantial advisory fees on Disney's deal for 21st Century Fox. The buy-side advisers — J.P. Morgan Securities LLC and Guggenheim Securities LLC — could see total fees of $62 million to $71 million while the sell-side advisers — which also includes Deutsche Bank, along with Goldman and Centerview — could see total fees of $73 million to $83 million, according to Freeman Consulting.

Those sums are likely to come down substantially if the merger does not close; in most cases the bulk of the financial advisory fees are tied to a deal's completion. But just landing a mandate on large transactions is a positive for investment banks because it shows they were able to win highly coveted business in an extremely competitive field.

And Centerview has certainly proven it is capable of winning a number of large mandates.

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