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Deutsche, BT seal $10B deal
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November 30, 1998: 6:39 a.m. ET
German bank's $93 a share offer for Bankers Trust to create world's biggest bank
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LONDON (CNNfn) - Deutsche Bank has announced it will pay $93 a share to buy Bankers Trust in a $10.1 billion deal that will create the world's largest bank, the companies announced Monday at a joint news conference in Frankfurt.
The deal comes at some cost, however. About 5,500 jobs are expected to be cut, most of them in New York and London. Job cuts will be shared equally in Information Technology, global markets, global equity and other areas.
Deutsche (FDBK) also announced it is setting aside $400 million to offer incentives to retain key staff over the next few years.
The bank claimed the merger would generate annual cost savings of 1.7 billion marks ($1 billion) by 2001.
The combined bank will have more than $800 billion in assets, making it the world's largest banking company, ahead of Switzerland's UBS.
Deutsche plans a capital increase of 4 billion marks ($2.3 billion) to finance the purchase. It will fund the remainder through existing bank funds and other instruments including a bond issue.
Deutsche supervisory board chairman Rolf Breuer said the capital increase would not be dilutive.
He also said the bank has no further plans for expansion in the United States.
The supervisory boards of both banks approved the deal in New York over the weekend. Two-thirds of Bankers Trust's (BT) shareholders still need to give their support, along with regulators in Germany, Europe and the United States.
The banks last week confirmed speculation that they were in talks .
Deutsche said it hopes to complete the deal by May 1999. It has applied for a listing on the New York Stock Exchange.
Analysts said the deal is unlikely to be the last in the banking sector, although future deals won't be as big.
"We will see further consolidation both in Europe and the U.S. , whether we will see more transatlantic transactions of this size is far more questionable," said Matthew Czepliewicz, banking analyst at Salomon Smith Barney in London.
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