The ultimate dream of Wall Street's deal maker

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The Independent Online
SANFORD Weill, better known as Sandy, understands making deals. It has been his skill, and his ruthlessness, in buying troubled firms cheap, cutting costs and folding them into each other that, over nearly four decades, has elevated him to the top of the pile on Wall Street and now to the top of the world.

Last September, when Mr Weill bought Salomon Inc at a relatively cheap two-times book value, to create a towering Salomon Smith Barney, it was tempting to think that maybe he was ready to shed the climbing boots. Those who knew him better suspected that his acquisitive appetite was still not sated.

Even his high earnings have not been enough to tempt Mr Weill into luxury retirement. Last month, it emerged that Mr Weill had exercised stock options in 1997 worth no less than $220m (pounds 132m). Not bad, especially when you consider Mr Weill was already being paid a salary of $7.5m. But Mr Weill's pay seems less outrageous when you know that Travelers stock rose 78 per cent last year.

Even in those post-Salomon days, when headline writers were calling Wall Street, "Weill Street", the 64-year-old native of Brooklyn was dropping hints of more to come. "I have never in my life said anything was the culmination of a dream, because if you stop dreaming, I can't imagine what the world would be like." Now we know his new dream and it is called Citigroup.

The son of a Polish immigrant who became a successful dress manufacturer in Brooklyn's Flatbush neighbourhood, Mr Weill is an entirely self-made Titan. He started on Wall Street in 1955 as a low-paid messenger for Bear Stearns. Then, in 1960, he risked everything raising $200,000 with three friends and founded a tiny brokerage firm, Carter, Berlind, Potoma & Weill.

It was from that beginning that Mr Weill has grown into the extraordinary power he is today. His has not been a career without disasters and times of frustration, most notably after his spell in the early 1980s as president of American Express from which he was eventually to walk out.

His entry into AmEx began in the 1970s, when his partnership bought several ailing firms including Shearson Hamill and Loeb Rhoades. It was in 1981 that Mr Weill sold Shearson Loeb Rhoades to AmEx for $930m and he was elevated to AmEx president. He left in 1985, however, after falling out with AmEx's then chief executive officer, the legendary James Robinson.

After failing to insert himself as CEO of BankAmerica, Mr Weill found another springboard in Commercial Credit. In 1988, he negotiated the first important deal of his comeback, the acquisition by Commercial Credit of a then struggling Primerica. Among Primerica's assets, as well as the AL Williams insurance company, was a retail brokerage house called Smith Barney.

Six years ago, in 1992, Weill took his first bite out of another giant insurer named Travelers. For $722m, he acquired 27 per cent of Travelers stock. The following year was more important still. In sweet revenge on AmEx, he bought back the Shearson brokerage operation for $1.2bn. And he did another thing - he acquired the remainder of Travelers with $4bn in stock. Weill became Travelers.

Not that all went well for Mr Weill at first as Travelers' head. Anxious to build up Smith Barney, he hired Robert Greenhill, a former president of Morgan Stanley. The appointed translated into multiple expensive hires from Morgan to Smith Barney, but the firm was slow to gain impetus and the Greenhill tenure has since been regarded as somewhat disastrous.

Even so, by last year, Weill was atop a financial and insurance powerhouse. Aside from Smith Barney, it included companies selling life insurance, property and casualty insurance, annuities, mutual funds an credit cards. But as deregulation began breaking down the walls between America's financial institutions, he began worrying about something else: making Travelers more than just mighty in America. He wanted global reach.

That was why he bought Salomon. "The real growth opportunities in the financial business are going to come from the privatisation of government- owned companies around the world and in emerging markets," he said after the Salomon deal became public. Now, with Citicorp, he will be in an almost invulnerable position to take advantage of those opportunities world-wide.

Can Sandy Weill possibly have any more dreams? Even in these heady days, topping this deal will surely be tough. Holders of the new Citigroup stock will be hoping instead that he will confine his dreams to something else: making the new giant work.