ING's foothold in Dillon Read, which has performed strongly recently as a mergers and acquisition boutique, dates back to ING's rescue of Barings two years ago. Barings Holding Company, as it was before its collapse, had bought 40 per cent of Dillon Read in 1991.
A struggle is now raging between ING and Dillon Read over the 25 per cent still in ING's hands. Dillon Read has the option to re-acquire that stake by the end of June and until recently appeared set on doing so. Dillon Read's executives hold the other 75 per cent.
ING confirmed from its Amsterdam headquarters yesterday that it would prefer not to lose its interest and proceed instead to buying all of the bank. "If the conditions are right for both parties, it would be nice to have it all," said a company spokesman.
He indicated that talks were under way and should be completed within the next fortnight, with the issue of price the biggest sticking point. Unconfirmed reports have suggested that to buy the balance of the privately held bank's stock, ING would have to find between $425m and $450m (pounds 262m- pounds 277m).
That Dillon Read would be an attractive catch for ING is evident. Like other merger and acquisition specialists on Wall Street, the bank has benefited handsomely from the recent rush of corporate combinations. After being briefly bruised in March, optimism that the mergers surge will continue has returned with the new upwards momentum of the New York stock markets.
There is still little evidence of enthusiasm on the part of Dillon Read for a full ING takeover. Rather, indications in New York point to some friction in the negotiations.
"As you know, Dillon Read has been in discussion with ING regarding the exercise of Dillon Read's option to acquire the 25 per cent that ING holds," Peter Rosenthal, a spokesman for the bank said yesterday. "In the course of those discussions, Dillon Read has been receiving constant proposals from ING in which ING appeals directly to Dillon Read not to exercise its option".
Only in February, the bank's management circulated a memo to staff indicating its intention to buy back the 25 per cent held by ING and to break links with the Dutch group.
Among recent high-profile mergers in which Dillon Read acted as principal advisers was the $3bn stock-swap deal last December between the Long Island Lighting Company of New York and another utility, the Brooklyn Union Gas Company.
Dillon Read's success has reflected well on ING Baring's corporate finance operation in London. ING Barings also has a securities business in New York, employing 1,200 and specialising in global high-yield businesses, emerging markets and banking.