Dell takeover battle set to generate $400m fees bonanza for banks

The $24.4bn (£16bn) takeover battle for Dell is set to hand Wall Street firms their biggest advisory payday in at least three years by generating $400m in fee income for deal makers, including a potential $70m windfall for Barclays.

Most of the income will go to banks advising bidders on the debt that will fund the highly leveraged competition for the computer maker, according to a report by the Wall Street Journal. "People who have been starving on an island for years are licking their chops," said Mike Madden, a veteran Wall Street deal maker. "You are looking at a field day for fees."

Three bidders are vying for Dell, led by the company's billionaire founder Michael Dell who has teamed up with the private equity firm Silver Lake to make the opening bid. However, two further bids were lodged last month by the activist investor Carl Icahn and the buyout specialist Blackstone Group – both topping the founder's offer of $13.65 a share.

According to the WSJ, a successful Silver Lake/Dell deal alone would create the largest fee pool since the turn of the decade and would generate the most advisory income from a leveraged buyout since the Texan energy group TXU was acquired for $32bn in 2007. Even though there have been larger deals than the $24bn Dell battle since 2010, the highly leveraged nature of Silver Lake's bid means that banks will generate significant fees from arranging the debt. The banks who arrange the debt for the winning buyout will generate the largest fees, with Barclays, Bank of America, Credit Suisse and Royal Bank of Canada working for the Silver Lake bid. That banking quartet could generate fees of $70m each for brokering the $14bn of debt that underwrites the offer.

Another group of banks advising Dell on how to manage the bids – Goldman Sachs, Evercore Partners and JP Morgan Chase – could earn a total of $60m, according to regulatory filings. Goldman Sachs alone is earning $1m a month from the deal.