US investment bank to merge with Warburgs

Swiss Bank Corporation snapped up US investment bank Dillon Read yesterday in a $600m (pounds 366m) deal that confirmed the high prices being paid for a slice of Wall Street's corporate finance and advisory work. The acquisition followed hot on the heels of the collapse of talks between Dillon and its former 40 per cent shareholder, ING, the Dutch financial services group that owns Barings.

SBC said it would merge Dillon Read with Warburgs, the British investment bank it bought two years ago, providing the deal was approved by the US Federal Reserve Board. Although the price paid represents around three times Dillon's book value, SBC said it did not believe the acquisition would result in a material dilution of earnings. The Warburgs acquisition in 1995 was struck at one times book value.

Hans de Gier, chairman and chief executive of SBC Warburg, said: "The creation of a strong US-based franchise, centred on advisory and equity financing, will enable us to improve our position in these corporate finance- led international businesses."

The absence of a meaningful presence in the US has been seen as a blind spot for Warburgs that would have to be addressed through an acquisition. The deal follows a previous attempt to gain a US toehold through an agreement to share research with Dean Witter.

Founded in 1832, Dillon Read has 730 employees in its offices in four American cities as well as London, Paris and Tokyo. Last year, the firm was among the leading mergers and acquisitions advisors, having completed 50 deals with an aggregate value of $45bn. The company is also active in the high yield, equity and private placement markets, having completed transactions valued at over $8bn in these markets in 1996.

The terms of the deal were struck quickly after Dillon's management decided to shun ING in order to forge a link with a stronger global player. SBC's offer is understood to have been pitched at a lower level than ING's proposed bid.

Dillon Read was believed to be in talks with other parties even while negotiating with ING. Its partners had an option to buy ING's 25 per cent stake which the Dutch group said it expected them to exercise when talks ended. Dillon's partners are believed to have had the right to buy the stake back at book value, which put them in a strong position to negotiate with other parties.

Analysts said that while the cost of Dillon Read was high, the crucial element of the deal would be the clauses dictating how key personnel would fit in within the new group. The relationship nature of Dillon Read's business will make it important that partners are locked into the merged entity to keep the firm's client base.

For Dillon Read the deal not only means a windfall for the partners, but also the guarantee of not being turned into a niche mergers and acquisitions player without the capitalisation needed to compete with the first-tier players.

News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
News
people
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Sport
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
football
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
ebooksAn unforgettable anthology of contemporary reportage
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
i100
Sport
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
boxing
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments