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Lehman buys Cowen unit
July 17, 2000: 11:44 a.m. ET

Acquires private client business of SG Cowen for undisclosed amount
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NEW YORK (CNNfn) - Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, disclosed Monday it has acquired the private client services unit of smaller Wall Street rival SG Cowen, joining the group of brokerages that are boosting their retail businesses.

The deal, terms of which were not disclosed, brings 130 SG Cowen brokers with 60,000 clients and assets under management of approximately $10 billion into Lehman's fold, according to the companies. SG Cowen is a unit of French bank Societe Generale SA, which purchased the brokerage in 1998.

The acquisition come as retail brokerages, including Merrill Lynch (MER: Research, Estimates), Morgan Stanley Dean Witter (MOR: Research, Estimates) and PaineWebber Group Inc. (PWJ: Research, Estimates), face growing pressure from Internet-related brokerages, which can tempt cost-conscious customers away from the blue-blood Wall Street firms.

graphicIt also comes on the heels of UBS AG's agreement to buy PaineWebber Group Inc. for $10.8 billion in cash and stock, which was unveiled last Wednesday. That deal catapults the combined company to the world's top private banking organization, with $422 billion in private client assets.

SG Cowen's private client group serves the investment needs of affluent individuals as well as pension funds, money managers and some financial institutions. The firm said it decided to exit the brokerage business because it couldn't achieve the scale it felt it needed to compete on Wall Street.

For its fiscal second quarter, Lehman posted record income of $378 million, or $2.78 a diluted share. The company has shifted its focus in recent years from predominantly bond trading to a diverse range of products and services, including equity trading, underwriting of initial public offerings, investment banking and money management.

Lehman (LEH: Research, Estimates) shares declined 2-1/32 to 113-13/16 in mid-morning trading on the New York Stock Exchange. Back to top


Lehman, Cowen in talks - July 14, 2000

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Lehman Brothers

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