Eleven years ago, at the height of the telecom bubble, Deutsche Telekom paid about $51 billion for one of America's smallest national cell phone companies, hoping to gain entry into the burgeoning U.S. market.
On Monday, the German giant announced it's selling the offspring of that deal -- T-Mobile USA -- to AT&T for $39 billion.
That 2000 investment -- now worth about 40 percent less after adjusting for inflation -- has cost Deutsche Telekom and its shareholders dearly. The benefits for the American public, which were widely touted at the time as the German company fought for regulatory approval, are debatable.
But the bankers on those deals sure made a killing. And while it remains to be seen whether the same purported "synergies" and "cost savings" that were peddled in 2000 will ultimately benefit AT&T's shareholders who are being promised the same thing, bankers once again are poised to strike it rich. Bankers' fees will roll in regardless of whether their advice will ultimately benefit their clients.
"When you look at investment bankers, their job is to put buyer and seller together," said Matt McCormick, a portfolio manager at Bahl & Gaynor, which oversees about $3.2 billion. "Much like a real estate broker, if you're trying to buy a house, does the broker really care if you're in a ranch, or a two-story home, or with a pool or not? They are only paid if a deal gets done."
In AT&T Deal, Bankers Guaranteed To Benefit As Consumers And Shareholders Hope For Best
