NEW YORK (CNNfn) - SBC Warburg, the investment-banking and capital-markets division of Swiss Bank Corp., announced plans Thursday to buy Wall Street's Dillon Read & Co. for about $600 million in stock.
Dillon Read agreed to the deal just one day after merger talks with another suitor, Dutch-British firm ING Barings, fell apart.
ING Barings currently owns 25 percent of Dillon Read, with the remaining 75 percent held by Dillon Read management.
However, plans call for ING to divest its Dillon Read stake after the SBC Warburg deal, selling its share of the company to either Dillon Read or Warburg.
Warburg will finance the deal, which remains subject to regulatory approval, with existing stock.
One analyst touted the deal as a powerful combination of finance titans.
"Dillon Read is very much a corporate finance business with a good client list within America. SBC Warburg
has gained certainly a strong European-focused list of customers," said Robert Montague, senior analyst at IBCA. "In that respect, it is a good fit."
Once the deal closes, the combined company will be known as SBC Warburg Dillon Read.
The $600 million price tag on Thursday's deal represents more than three times the book value of Dillon Read, which has $179 million in equity capital.
Dillon Read has a stable of blue-chip U.S. corporate clients and has advised on many large deals, including the $4.3 billion recapitalization of Levi Strauss & Co. and the $13.1 billion sale of Rockwell International's aerospace division to Boeing.
SBC Warburg is also known as a high-status banker in London.
Thursday's acquisition represents the latest in a series of attempts by U.S. and overseas banks to get a piece of the American securities business.
PNC Bank Corp. recently held talks to buy Oppenheimer & Co.
Analysts believe investment banks require a position in the United States in order to become a global competitor.
"For banks to be global, they need to -- in their estimation -- have a strong securities presence," said Sallie Krawcheck, an analyst at Sanford C. Bernstein. "For companies to have a strong securities presence internationally and globally
they have to have a strong presence in the U.S."
Warburg has been looking to obtain a U.S. presence for years and the Dillon Read deal will give it more weight in corporate finance, mergers and acquisitions and equity and debt writing there.
For its part, Dillon will gain a new platform to enhance its equity and high-yield areas.