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NatWest buys Wall Street stars

Investment banking: $135m deal nets Gleacher M&A boutique
NatWest Group is strengthening its presence in the US investment banking sector via the $135m (pounds 85m) acquisition of the New York-based mergers and acquisitions boutique Gleacher & Co, which was announced yesterday.

The UK bank is still on the lookout for other acquisitions in fund management and investment banking, both in the US and the UK.

Gleacher & Co is headed by Eric Gleacher, a hard-driving and aggressive former Marine officer whose speciality is hostile takeover bids. He is a veteran of some of the biggest takeover battles of the 1980s, and advised Kohlberg Kravis Roberts on its acquisition of RJR Nabisco - the blockbuster deal which was featured in the best selling book Barbarians at the Gate.

The newly named Gleacher NatWest will become the principal focus of NatWest's investment banking operations in North America. The deal in effect locks in the five partners who own most of Gleacher. If they leave before an agreed period they will have to pay their share of the acquisition proceeds back to NatWest.

NatWest has never been regarded as a top-rank player in US investment banking, and bringing on board an established star like Mr Gleacher will give it access to a web of personal relationships with executives in US industry. In addition to his key M&A role in the US, Mr Gleacher will play an active role in developing Natwest Markets' investment banking activities world-wide.

Mr Gleacher was formerly head of the M&A department at Morgan Stanley. He left in 1990 to set up his own firm, and shortly afterwards sold a 25 per cent stake to Morgan Grenfell, which was soon in turn acquired by Deutsche Bank.

Mr Gleacher said yesterday that Deutsche had approached him earlier in the year with a takeover offer, but that he had preferred NatWest's approach.

The relationship with Deutsche Morgan Grenfell will now be dissolved, with Gleacher & Co becoming a wholly owned subsidiary of NatWest.

Gleacher & Co has been earning big fees in recent years, as a result of record activity in the M&A market, which this year has surpassed the levels of the late 1980s. Although it has a small staff of around 40, it has none the less been a serious competitor to the big Wall Street investment banks.

Gleacher earned $10m working for American Home Products in its $9.7bn takeover of American Cyanamid - the biggest M&A deal of 1994. The firm also acted for PaineWebber in its $670m acquisition of Kidder Peabody, and Texaco on its $1.1 billion divestiture of Texaco Chemical.