Credit Suisse Group AG is buying the brokerage Donaldson, Lufkin & Jenrette for $11.5 billion, marking the second time this summer a Swiss banking giant will take control of a Wall Street firm.
The deal, announced today, would unite DLJ with Credit Suisse’s investment banking firm Credit Suisse First Boston, which has headquarters in London and New York.
If successful, the deal would create one of the leading underwriters in high yield, or junk, bonds as well as one of the top firms offering merger advice to corporations. At the same time, it would expand the global reach of DLJ.
The combined company will have more than 26,500 employees and assets in excess of $600 billion.
The announcement followed July’s move by Credit Suisse rival UBS AG to buy New York-based brokerage firm PaineWebber in a deal worth about $11 billion. Credit Suisse is Switzerland’s second-largest banking group, following UBS.
Pricing the Deal Credit Suisse said it will pay $90 per share in cash and stock for New York-based DLJ. The DLJ and Credit Suisse boards have voted to approve the offer, Credit Suisse said.
“This powerful combination substantially strengthens Credit Suisse First Boston’s competitive position as one of the world’s leading investment banking services,” according to the Swiss bank.
A stake of some 71 percent in DLJ is held by Axa Financial, a subsidiary of French insurance giant Axa SA. Axa has agreed to sell its holding in DLJ for $8.1 billion, Credit Suisse said in a statement.
In early September, Credit Suisse will open a cash tender offer in the United States for the 29 percent of shares held by DLJ’s public shareholders, it added.
Axa will receive 30 percent of its payment in cash and 70 percent in Credit Suisse Group shares.
DLJ would make an “important contribution” to Credit Suisse Group’s asset management and private banking business in the United States, the statement said.
New Alliance, New Name After the deal is completed, the combined investment banking firms will operate under the name Credit Suisse First Boston.
Joe L. Roby, chief executve of DLJ, will be chairman of the executive board of the combined firm while CSFB chairman and chief executive Allen D. Wheat will be chief executive and president.
Rumors of a deal had pushed shares of DLJ up 25 percent on the New York Stock Exchange on Tuesday.
But Credit Suisse shares fell on the rumors in Zurich today. When the deal was announced in the afternoon, they were still down.