March 25 (Reuters) – Lazard Ltd and Centerview Partners LLC have only a fraction of the staff and resources of their larger investment banking brethren, such as Goldman Sachs Group Inc and JPMorgan Chase & Co.
Yet the independent investment banks used their sector expertise and personal relationships with company executives to win the biggest deal of the year so far, the merger of H.J. Heinz Co and Kraft Foods Group Inc. Terms of the deal, announced on Wednesday, value the combined company at $106 billion including debt.
Lazard shares rose as much as 2.8 percent on Wednesday.
Lazard and Centerview were the only investment banks advising the two companies on the deal. Lazard could earn as much as $66 million in fees and Centerview could earn as much as $97 million, consulting firm Freeman & Co estimated.
Lazard has a long-standing relationship with Brazilian private equity firm 3G Capital Partners LP, co-owner of Heinz along with Warren Buffetts’ Berkshire Hathaway Inc. Centerview had worked with both Kraft and Heinz.
Large banks vie for big M&A assignments by touting their financing capabilities and prowess in areas ranging from currency hedging to treasury management. Independent investment banks say their model poses fewer conflicts of interest and that full-service banks often seek to cross-sell products to clients.
The deal between Heinz and Kraft, which involves a stock exchange sweetened by a dividend financed by Berkshire Hathaway and 3G, required no bank financing and thus no need for involvement from large firms.
Both 3G and Kraft sought to limit the number of advisers to avoid leaks of deal negotiations, according to people familiar with the deal.
Centerview, co-founded in 2006 by former UBS vice chairman Blair Efron and former Wasserstein Perella & Co president Robert Pruzan, has just 200 employees. Lazard employed more than 2,500 people as of Dec. 31.
The deal will push Lazard from seventh place to fourth in the global M&A league tables so far this year and up from 12th a year earlier, according to Thomson Reuters data. Centerview will jump from 14th place to sixth this year, up from eighth place this time last year.
3G has worked with Lazard often, including during the Brazilian group’s $3.3 billion acquisition of Burger King in 2010 and its acquisition of Canadian coffee chain Tim Hortons last year.
Former Lazard banker Antonio Weiss has a longstanding relationship with 3G. In 2008, he helped advise brewer InBev , backed in part by 3G founder Jorge Paulo Lemann, on its acquisition of Anheuser-Busch. Weiss later advised the combined company on its $20 billion buyout of Grupo Modelo in 2013.
Lazard CEO Ken Jacobs helped lead the Heinz-Kraft deal for the firm after Weiss left this year for the U.S. Treasury Department.
Centerview worked with Kraft during its 2010 acquisition of chocolate maker Cadbury. The firm also advised H.J. Heinz during the ketchup maker’s takeover by 3G in 2013.