Panmure Gordon pair celebrate turnaround with Durlacher deal

PANMURE GORDON'S plans to merge with its smaller rival, Durlacher, will create a combined stockbroking business worth up to pounds 100m, with Panmure's senior management expected to own about 10 per cent of the enlarged group's shares.

Richard Wyatt and Tim Linacre, the chairman and chief executive of Panmure, will retain their roles after the merger and are rumoured to be sharing a stake equivalent to up to 10 per cent of the new business. Neither would comment yesterday on the exact terms of deal.

Mr Linacre said: "Lazard has been a very supportive parent during 2004 and early 2005 and during this transaction."

The merger is a remarkable turnaround for Panmure, which changed hands last year for nothing when it was sold to Lazard by WestLB.

The merger with Durlacher will now give Lazard a 33 per cent stake in the new group; a holding which could be worth more than pounds 30m. Another one-third of the group's shares will be held by Durlacher's existing shareholders and quoted on the stock market, and a further one-third by the company's employees.

The new group, which will bring the Panmure Gordon name to the stock market for the first time in its 128-year history, will have 99 corporate clients ranging from large, FTSE 100 companies - such as WPP, the advertising agency group, and Associated British Foods - to small, AIM-quoted companies.

Panmure provides research and makes markets in the shares of more than 400 companies. Durlacher researches 75 companies and makes markets in 90. The merged group will have combined revenues of about pounds 35m and operating profits of pounds 15m-pounds 20m, although there will be an unspecified amount of exceptional costs related to the merger to be written off in the company's first year.

There will also be pounds 48m of tax losses in the business inherited from Durlacher, which management will be able to offset against future profits.

The transaction was being couched yesterday as the reinvention of the traditional, independent UK stockbroker which virtually died out after the Big Bang in 1986.

However, other independent brokers have recently sprung up in the City, although the combination of Panmure and Durlacher is expected to provide the group with sufficient critical mass to compete. It will also have an ongoing business relationship with Lazard as a potential source of new business referrals.

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