February 20, 2014 / 8:25 PM / in 5 years

Goldman Sachs misses out on WhatsApp, 2014's top deals so far

(Reuters) - WhatsApp? Not Goldman Sachs.

An illustration photo shows a man holding a smart phone with a Facebook logo as its screen wallpaper in front of a WhatsApp messenger logo, in Zenica February 20, 2014. REUTERS/Dado Ruvic

The world’s top deal adviser for nine of the past 10 years, Goldman Sachs Group Inc (GS.N) has been notably absent on 2014’s largest mergers and acquisitions, including Facebook’s $19 billion deal to purchase mobile messaging service WhatsApp.

Normally the go-to-banker for big deals, Goldman has missed out on the top five transactions in the young year, according to Thomson Reuters data. Facebook Inc (FB.O) relied on boutique investment firm Allen & Co to help with its offer to buy startup WhatsApp, which in turn chose Morgan Stanley (MS.N).

The deal, announced on Wednesday, will earn the two banks up to $85 million in estimated fees, according to Freeman & Co LLC, a mergers and acquisitions advisory firm which researches the financial services industry.

Typically, Goldman Sachs starts out slowly and still land at the top of the league tables by the end of the year. One big transaction can heavily sway bankers’ rankings.

But Goldman has advised on only four of the top 20 deals announced this year so far, excluding Charter Communications’(CHTR.O) attempt to buy Time Warner Cable.

Bankers also risk missing out on more big deals as companies opt to use a small number of advisers, partly to reduce the chance of leaks and as chief executives lead the charge in negotiating deals themselves.

Goldman, which declined to comment on the deal data, backed Charter in what would have been the biggest deal of the year, but last week Comcast Corp (CMCSA.O) agreed to buy Time Warner Cable TWC.N for $45 billion.

If regulators approve the deal, other banks will share up to $143 million in fees the deal is estimated to generate, among them Goldman’s biggest rivals JPMorgan Chase & Co and Morgan Stanley, according to Freeman & Co LLC.

Goldman Sachs was also absent from a number of other large deals this year - Suntory Holding’s (2587.T) acquisition of Beam Inc BEAM.N for $13.6 billion and Actavis Plc’s ACT.N purchase of Forest Laboratories Inc FRX.N for $25 billion.

That now puts Goldman Sachs in ninth place in the coveted league tables for financial advisors, according to Thomson Reuters data.

Goldman Sachs has held the top position for the past ten years with the exception of 2009, when it landed the number two spot behind Morgan Stanley.

Morgan also beat Goldman in the high-profile assignment to advise Facebook on its initial public offering, which is not part of deal league tables. Goldman later worked with Twitter Inc on its (TWTR.N) IPO.

Last year, Goldman’s role in Verizon Communication’s (VZ.N) $130 billion buyout of Vodafone Group’s (VOD.L) 45 percent stake in their joint venture easily catapulted it to the top rank. The bank had advised Vodafone.

Facebook’s founder and Chief Executive Mark Zuckerberg proposed the tie-up to WhatsApp’s founder Jan Koum over dinner on February 9, and the two sealed the deal 10 days later.

When it came to hammering out the details around Time Warner Cable, the two chief executives, Comcast’s Brian Roberts and Time Warner Cable’s Rob Marcus along with their respective CFOs, negotiated key points of the deal by phone as well as in-person meetings, without relying much on advisers.

For the largest deal last year, all it took in the end was a workout session in the gym followed by a breakfast, when Verizon’s CEO Lowell McAdam and Vodafone’s Vittorio Colao agreed on a price that concluded in the mega deal.

Reporting by Nicola Leske, additional reporting by Matt Toole, editing by Peter Henderson

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