Would you like to make this site your homepage? It's fast and easy...
Yes, Please make this my home page!
"All over the world are milllions of mind-controlled zombie slaves under the constant influence of those in the secret network who have programmed them or know the means to activate that programming"
David Icke - ...I am me - I am free
BANK MERGERS CONTINUE.
AND THEN THERE WAS ONE?
Credit Suisse to Buy DLJ for $13.4 Billion
Banking Group Paying Premium
from Bloomberg News
NEW YORK (Aug. 30) -- Credit Suisse Group agreed to buy Donaldson, Lufkin & Jenrette Inc. for $13.4 billion in cash and stock, eliminating one more rival to the dwindling number of dominant global firms.
DLJ shareholders will receive $90 per share, about 36 percent above Monday's closing price, the companies said. Credit Suisse will pay DLJ's parent, French insurer Axa SA, $8.14 billion in cash and stock. Other investors will get cash. The price includes $1.9 billion of options held by DLJ executives.
Credit Suisse, led by Chief Executive Lukas Muehlemann, has spent about $12 billion the past three years to expand in insurance, money management and securities. A purchase of DLJ, which generates four-fifths of its profit in the U.S., will strengthen the Credit Suisse First Boston investment bank's telecommunications and junk-bond businesses, while adding to pressure on smaller firms to sell themselves.
``I was concerned about a series of transactions that would have the effect of putting us at a disadvantage,'' said Joe Roby, the 61-year-old DLJ chief executive who initiated the talks, in an interview. He will become chairman of the combined firm's executive board.
More Purchases
The transaction comes less than two months after UBS AG bought Paine Webber Group Inc. for $16 billion, underlining the effort by global firms to expand the products they offer. Weeks after that Bear Stearns Cos.' chief executive James Cayne said he'd be willing to listen to takeover offers.
Shares of potential acquisition targets -- Bear Stearns, Lehman Brothers Holdings Inc. and J.P. Morgan & Co. -- rose in the wake of the DLJ transaction.
``Global consolidation isn't much past the third inning,'' said John Duffy, president of Keefe, Bruyette & Woods, an independent New York-based investment bank specializing in financial services firms.
That's because the three biggest firms -- Morgan Stanley Dean Witter & Co., Goldman Sachs Group Inc. and Merrill Lynch & Co. -- control more than 50 percent of the underwriting and mergers business. In the early 1990s, the top three accounted for about 40 percent.
Credit Suisse shares fell as much as 5.1 percent to 362 francs ($207.80) on the Zurich exchange. The stock has risen 11 percent over the past six months. DLJ shares gained 27.6 percent yesterday to $84, and closed at $88.38 today.
Rankings
The combined CSFB and DLJ will be Wall Street's top-ranked research firm, passing Merrill -- based on the number of 1999 Institutional Investor magazine ranked analysts --the No. 3 mergers outfit, passing Salomon Smith Barney; the No. 4 stock underwriter and the top junk-bond business.
A CSFB official said overlap at the firms could lead to 2,500 job losses, or about 9 percent of the combined company. Gary Goldstein, president of recruiting firm Whitney Group, estimates as many as 5,000 analysts, bankers, traders and support staff could lose their jobs.
Allen Wheat, who runs CSFB, will become CEO of the firm.
DLJ's Hamilton ``Tony'' James, currently chairman of investment banking, and CSFB's Charles Ward, president of investment banking, will be co-heads of the division.
Founded in 1959 and now the No. 7 investment bank by capital, DLJ also owns Pershing, one of the biggest processors of stock trades.
CSFB brings commercial-banking capabilities and the Palo Alto, California-based technology investment banking group led by Frank Quattrone to complement DLJ's media and telecommunications units, whose clients have included Deutsche Telekom AG, Europe's largest phone company.
Credit Suisse said it will set aside $1.2 billion to pay retention bonuses over the next three years to DLJ employees. The company also said it will take a restructuring charge of about $850 million.
Credit Suisse is paying about 2.95 times DLJ's book value per share, less than the 3.5 times UBS paid for Paine Webber. Morgan Stanley and the law firm of Wachtell, Lipton, Rosen & Katz advised Axa. The law firm of Shearman & Sterling advised CSFB.
Axa said today it offered to buy the 40 percent of Axa Financial it didn't already own for $53.50 a share.
CSFB Clients
CSFB, which ranks No. 4 on the Bloomberg global mergers and acquisitions league table, has advised on 180 completed transactions worth $393 billion in the year to date. Clients include AT&T Corp., the No. 1 U.S. cable-television company, France Telecom and Hong Kong's Pacific Century Cyberworks Ltd.
Axa, which owns 71 percent of DLJ, will receive $5.75 billion of Credit Suisse stock and more than $2.39 billion in cash. Axa will own about 8 percent of Credit Suisse. DLJ's DLJdirect Inc. will continue to trade separately but will be renamed.
Credit Suisse included cash because it doesn't have a U.S. listed stock to pay to DLJ public shareholders, said people involved in the sale.
The purchase will be the third major acquisition by Credit Suisse since Muehlemann took over at the Swiss bank in January 1997. He bought Winterthur Insurance Co. for about $9 billion in stock that year, and snapped up Banco de Investimentos Garantia, a Brazilian investment bank, in 1998.
Talks
Roby said the transaction caps a few weeks of talks he initiated in the wake of UBS AG's purchase of Paine Webber Group Inc. That $16 billion purchase underscored for Roby the pressures his firm faced amid global consolidation.
``We've been scratching our heads on these issues for a while,'' said Roby. About three weeks ago, ``Allen happened to call me for a nice social lunch. At the time, I shared with him some of our thinking. He pursued the opportunity aggressively.''
DLJ's effort to build a global business is one reason its staff has doubled in the past four years to 11,300, creating one of the fattest payrolls in the industry. Compensation expenses at DLJ accounted for 54.6 percent of net revenue in the second quarter, compared with 44 percent at Morgan Stanley.
Axa is overhauling a collection of U.S. financial interests in which it's been investing since the early 1990s. Besides DLJ, its U.S.-unit, Axa Financial Inc., controls Alliance Capital Management LP and what was once the Equitable Cos.
Axa has been beefing up its money-management business, which yields steadier profits than investment banking without the risks of putting the company's own capital at risk. The company's Alliance Capital unit agreed in June to pay $3.5 billion for Sanford C. Bernstein Inc., a money manager known for its research and investments in undervalued shares.
Aug/30/2000 16:24 ET
Notice: David Icke, www.davidicke.com, David Icke E~Magazine, and/or the donor of this material may or may not agree with all the data or conclusions of this data. It is presented here 'as is' for your benefit and research. Material for these pages are sent from around the world. If by chance there is a copyrighted article posted which the author does not want read, email the webmaster and it will be removed. If proper credit for authorship is not noted please email the webmaster for corrections to be posted.
Back to European News Menu