MS Morgan Stanley

By Liz Hoffman 

In a world where bankers will do almost anything to avoid missing out on a big deal, Morgan Stanley's role in the multibillion-dollar combination of Agrium Inc. and Potash Corp. of Saskatchewan Inc. stands out.

The bank isn't just providing counsel to one side in the merger, unveiled Monday. It is advising both.

In a highly unusual arrangement, Agrium and Potash jointly retained Morgan Stanley to advise on their talks. A single engagement letter covers its mandate as joint financial adviser, and the two companies will split the bank's fee, according to a person familiar with the matter.

Each is a longtime Morgan Stanley client. The bank advised Agrium in its 2013 fight against an activist investor. It also represented Potash in the failed takeover of a big German rival last year. Both were the kind of in-the-trenches assignments that engender loyalty and stickiness.

Banks typically have to pick and choose to avoid tangling up their client relationships. Goldman Sachs Group Inc. famously drew fire when it advised both sides in New York Stock Exchange's merger with electronic trading firm Archipelago Holdings in 2005. Some critics wondered at the time whether Goldman got either party the best possible deal.

Goldman at the time nodded to possible conflicts but insisted they could be managed. To address the potential for conflict, Goldman was sidelined from negotiating the actual financial terms of the deal, an odd setup that cast it as more of a corporate consigliere and matchmaker.

Morgan Stanley's main man on the fertilizer deal was Richard Robinson, a senior natural-resources banker who has known both companies for years, the person familiar with the matter said.

The combination would create an industry powerhouse worth more than $25 billion at current market prices.

The deal was billed as a merger of equals. Talks for such combinations tend to be more collaborative than some outright takeovers.

Yet sticking points often come up in the process of apportioning ownership of the new company and dividing up management roles. Investment bankers are expected to go to bat for clients on such matters.

Both companies had additional banks that could presumably handle tougher points of negotiation. The parties also hired a combined six law firms on the deal.

(END) Dow Jones Newswires

September 12, 2016 22:48 ET (02:48 GMT)

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