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News > Deals
Dresdner, Wasserstein talk
September 12, 2000: 12:44 a.m. ET

U.S. investment bank is latest target of acquisitive European financial power
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NEW YORK (CNNfn) - Germany's Dresdner Bank is in talks to acquire New York investment bank Wasserstein Perella & Co., sources close to the situation told CNNfn.com Tuesday.

Negotiations between the two firms are advanced and a deal could be announced by the end of the week, the sources said. However, the acquisition could still fall apart.

Wasserstein Perella & Co. declined to comment. Dresdner also declined to comment.

Dresdner is interested in the New York-based Wasserstein's merger and acquisition, high yield and equity practice, a source said. The bank's purchase of Wasserstein could cost between $1.2 billion and $1.5 billion, the Wall Street Journal reported Tuesday.

A Dresdener-Wasserstein merger comes on the heels of Credit Suisse First Boston's agreement to buy Donaldson, Lufkin & Jenrette (DLJ: Research, Estimates) for $11.5 billion on Aug. 30. Swiss bank UBS (UBS: Research, Estimates) also agreed on July 12 to purchase securities firm PaineWebber for about $12 billion.

Speculation that J.P. Morgan is also up for sale have caused the firm's shares to soar. J.P. Morgan  (JPM: Research, Estimates) shares rose $2.56 to $171.88 in afternoon trading Tuesday.

An M&A boutique


The privately held Wasserstein was founded by Bruce Wasserstein and Joseph Perella in 1988. Perella quit the firm in 1993 to head Morgan Stanley Dean Witter's global investment banking business. Wasserstein currently has about 600 employees with offices including London, Paris and Frankfurt, Germany.

Wasserstein is strong in investment banking and ranks fifth in the U.S. as an adviser on mergers and acquisition. Wasserstein advised Axa Financial in the $11.5 billion sale of Donaldson Lufkin & Jenrette  (DLJ: Research, Estimates) to Credit Suisse First Boston. Wasserstein also helped Philip Morris (MO: Research, Estimates) in its $14.9 billion acquistion of Nabisco Holdings Corp.  (NA: Research, Estimates) and advised Time Warner  (TWX: Research, Estimates) in its $128 billion merger with America Online (AOL: Research, Estimates). Time Warner is parent of CNNfn.com.

The acquisition would strengthen the standing of Dresdner's investment banking unit Dresdner Kleinwort Benson, a practice that now ranks 14th in the M&A area in the United States and seventh in Europe.

Dresdner Kleinwort Benson has about 8,000 people worldwide in its bond, stock and corporate finance businesses, with about 1,000 based in the United States. While Dresdner Kleinworth is a top M&A advisor in the United Kingdom, the investment bank has failed to make a dent in the competitive U.S. market.

European-based investment banks have had a tough time making inroads in the coveted mergers and acquisition market, said analyst Evagelos Kavouriadis, of Sanford Bernstein. Morgan Stanley Dean Witter, Goldman Sachs, Salomon Smith Barney, UBS and Credit Suisse First Boston comprise the top five investment banks in the global M&A market. Dresdner is ranked seventh, Kavouriadis said.

"The deal will help Dresdner immensely in the U.S., because Wasserstein is strong in the U.S. and Dresdner is not," Kavouriadis said.

Dresdner is expected to pay about $1.2 billion to $1.5 billion for Wasserstein, which is too high, Kavouriadis said.

Dresdner may also have problems retaining top executives if the deal does go through.

"Dresdner would have to let Wasserstein run the group from the U.S. if they wanted to make it grow," Kavouriadis said.

However, Dresdner does not have the best luck with acquisitions, failing in April to purchase Deutsche Bank. In May, Dresdner Bank chairman Bernd Fahrholz said the firm would be looking to expand in key sectors globally, especially in the United States and Japan. Dresdner is also looking to expand its local presence in the European target markets of France, Italy, Spain and Scandinavia.

"They are now trying to recoup," Kavouriadis said. "Dresdner is trying to regain momentum." Back to top

  RELATED STORIES

Credit Suisse to buy DLJ for $11.5B - Aug. 30, 2000

UBS in for PaineWebber - July 12, 2000

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.