Dresdner in $1.5bn Wasserstein talks

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The Independent Online

The pace of consolidation on Wall Street looks set to accelerate after it emerged that Dresdner Bank is in talks to buy Wasserstein Perella, the US investment banking boutique, in a deal that could be worth as much as $1.5bn (£1.1bn).

The pace of consolidation on Wall Street looks set to accelerate after it emerged that Dresdner Bank is in talks to buy Wasserstein Perella, the US investment banking boutique, in a deal that could be worth as much as $1.5bn (£1.1bn).

The deal would fulfil the long-standing ambitions of Dresdner Bank to acquire a US investment banking business to supplement Kleinwort Benson, the City merchant bank it bought nearly five years ago.

Banking sources stressed yesterday that while discussions were at an advanced stage, there had been no final agreement on price.

News that Wasserstein was in takeover talks comes hard on the heels of the $13.4bn acquisition by Credit Suisse of Donaldson, Lufkin & Jenrette last week, and July's purchase of PaineWebber by UBS for $16bn as European firms scramble to retain a foothold in an increasingly US-dominated investment banking business.

The sale will throw the spotlight on the remaining independent US investment banks. Last week Deutsche Bank, which bought Bankers' Trust for $10bn two years ago, was at the centre of renewed speculation about its ongoing interest in JP Morgan.

Bear Stearns and Lehman Brothers have also seen their shares repeatedly buffeted by takeover talk. Wall Street observers believe that it will only be a matter of time before they too are snapped up.

For Dresdner, the acquisition of Wasserstein would mark the end of a string of failures which culminated in the collapse of merger talks with its two domestic rivals, Deutsche and Commerzbank. It would also be seen as the first sign of commitment by the new management team under Bernd Fahrholz, chief executive, to invest in the investment banking business, which has been hit by a mass of defections since the Deutsche Bank merger collapse. Dresdner shares fell initially on the news, although most analysts said the move made good strategic sense for the bank.

Wasserstein Perella shot to prominence in the US leveraged buyout boom in the late 1980s. But the partnership suffered in the early 1990s, leading Joseph Perella to quit the firm for Morgan Stanley.

Since then Bruce Wasserstein has reinvented the the firm as a more mainstream corporate adviser, recently picking up a series of high-profile mandates. These include advising PaineWebber on its takeover by UBS, and Time Warner, the media giant, on its attempted merger with America Online. Those deals pushed the firm up to fifth place in the US merger and acquisition rankings.

The deal is expected to leave Mr Wasserstein substantially richer and with a senior position in Dresdner Bank. Another big beneficiary will be Nomura, the Japanese bank which bought a 20 per cent stake in Wasserstein Perella in 1988 for $100m.

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