(Updates shares in second paragraph.)
Oct. 27 (Bloomberg) -- Lazard Ltd., the biggest non-bank merger advisory firm, rose the most since its initial public offering in 2005 after reporting a 24 percent increase in revenue from mergers and acquisitions in the third quarter.
Lazard climbed $4.11, or 17 percent, to $28.89 in New York trading, the most since the shares went public in May 2005. Revenue from advising on deals increased to $199.1 million in the period from $160.7 million a year earlier, the Hamilton, Bermuda-based firm said today in a statement.
“The key M&A advisory business blew away expectations,” David Trone, an analyst at JMP Securities LLC in New York, said today in a note.
Lazard, led by Chief Executive Officer Kenneth Jacobs, 53, is advising Medco Health Solutions Inc. on its announced $34.3 billion sale to Express Scripts Inc. and Progress Energy Inc. on its $25.5 billion sale to Duke Energy Corp., according to data compiled by Bloomberg. Lazard ranks ninth on the M&A league tables this year, with $203.4 billion in announced deals.
Earnings fell to $52.9 million, or 39 cents a share, compared with $62.2 million, or 46 cents, in the same period a year earlier. The earnings excluded an $18.2 million pretax gain related to the repurchase of its subordinated convertible promissory note, according to the statement. Earnings including the gain were 49 cents per share. The average estimate of 11 analysts surveyed by Bloomberg was for profit of 42 cents.
Stabilizing the European banking system will be key to continued expansion in global M&A, Lazard Vice Chairman Gary Parr said last month at the Bloomberg Dealmakers Summit. Global announced takeovers fell 18 percent to $533.6 billion in the third quarter from the previous period, according to data compiled by Bloomberg.
“In the current environment, which is challenging, our business model of the independent adviser is well-positioned,” Lazard Chief Financial Officer Matthieu Bucaille said today in a telephone interview. “We are not under the same pressures as some of our largest competitors who are subject to regulation and balance-sheet issues. The clients are asking for independent strategic advice.”
Financial advisory operating revenue fell to 253.6 million in the quarter from $254.4 million in the same period last year. Operating revenue from asset management rose to $216.7 million from $208 million as management fees increased 8.7 percent to $200 million.
Lazard paid 1.8 percent less in compensation expenses, which fell to $276.7 million, or 59 percent of operating revenue, from 60 percent, last year.
Evercore Partners Inc., the New York-based investment bank founded by Roger Altman, today reported a 35 percent increase in third-quarter profit as investment banking net revenue climbed to a record $138.4 million.
--Editors: William Ahearn, Rick Green
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