Stockbroker faces future as would-be buyers line up

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The Independent Online

The future of Cazenove, Britain's single most influential stockbroker, will be intensively debated tomorrow when the privately-owned company holds its annual meeting at its offices off Moorgate in the City.

The future of Cazenove, Britain's single most influential stockbroker, will be intensively debated tomorrow when the privately-owned company holds its annual meeting at its offices off Moorgate in the City.

David Mayhew, the chairman, will call the meeting to order amid a stream of reports that the business is being courted by leading American banks. Citigroup, the world's biggest bank, and Lehman Brothers are said to be interested in buying it outright. JP Morgan is understood to be discussing a joint venture that would allow Cazenove to retain its independence while gaining access to Morgan's financial resources. But Cazenove's shareholders also include a large number of senior executives who would prefer a straight cash exit.

Cazenove, which counts as its clients the Royal Family and half the companies in the FTSE 100 index, has some appropriately top-drawer shareholders, including 3i, Standard Life and Morley Fund Management. They bought into the broker three years ago at prices that valued the business at £1.1bn and, understandably, they are reluctant to agree to a takeover which values it at any less.

However, since then there has been a continuing bear market, and low levels of corporate and investor activity. Accordingly, Lehman is said to be willing to offer only £500m plus up to £300m depending on performance. Citigroup is reportedly willing to better this, but no one at any of these organisations was commenting yesterday.

Cazenove said in May it had received takeover approaches and was considering an initial public offering on the stock market. When the company reported its annual results in June, Mr Mayhew said that approaches were "all being benchmarked against our existing strategy of remaining independent and no action will be taken unless the board concludes that a transaction is clearly in the best interests of our clients, employees and shareholders".

Cazenove has battled to remain independent since 1986, when the so-called Big Bang reform of the London Stock Exchange allowed brokers and market-makers to be taken over by outsiders, principally foreign banks. In the intervening 18 years, weight of capital has become more decisive than the unbeatable contacts that have always been Cazenove's great intangible asset.

For that reason there has been considerable internal disagreement over the best way forward, with the old guard reluctant to cut its ties with the past. The fear is that, if Cazenove sells out, many of its clients will feel there is no longer any advantage in sticking with it. That, in turn, is affecting the price bidders are willing to pay.

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