In a coup for its growing investment banking business, Chemical Banking Corp. has hired Mark Davis, co-head of Salomon Brothers' mergers and acquisitions group.
Mr. Davis, who had led Salomon into the top five in the mergers and acquisitions advisory business, adds credibility to Chemical's investment banking aspirations and strengthens its one-stop shopping approach.
Mr. Davis possesses strong relationships with a number of top-tier firms, including Ford Motor Co., Newmont Mining Corp., and Scott Paper Co., which was recently bought by Kimberly Clark.
"We're taking another step forward in realizing our investment banking vision," said James B. Lee Jr., head of global investment banking at Chemical. "This was really the next logical step in this integrated effort." Mr. Davis will report to Mr. Lee.
Mr. Davis has a good reputation among investment bankers.
"He is top of the line, there is no doubt about it," said Gerard Smith, a managing director at UBS Securities, who spent 18 years at Salomon.
"This means that Chemical is getting serious about its commitment to investment banking," Mr. Smith said. "Morgan Guaranty built its investment banking around M&A and Roberto Mendoza, and that is what Chemical is now trying to do."
Mr. Mendoza, currently vice chairman at J.P. Morgan & Co., built the company's merger advisory business during the 1970s.
The 36-year-old Mr. Davis presumably gives Chemical a chance to build its franchise.
Chemical already has the No. 1 position in syndicated lending and a strong high-yield business, which serve as strong complements to an M&A business, said Raphael Soifer, a bank analyst at Brown Brothers, Harriman & Co.
The bank company has used those strengths to win a host of positions on various transactions, including leading a $1.55 billion bank loan and $650 million high-yield bond issue for Clayton Dubilier & Rice's acquisition of Riverwood International.
Chemical also led the bank debt and bonds when Boston Venture, a leveraged buyout firm, bought a majority stake in Time Warner Inc.'s Six Flags theme parks.
The bank has had a growing mergers and acquisitions advisory business. For instance, it recently was the adviser to Westinghouse Electric Co. in the sale of its defense business to Northrop Grumman Corp.
Analysts said that Mr. Davis brings a different level of M&A talent and experience to Chemical.
"This is a serious Wall Street injection," said George Salem, a bank analyst at Gerard Klauer Mattison.
"Chemical is backing up their words with actions in terms of what we've been hearing and in what their plans are," Mr. Salem said. "It's a compliment to them that he would come because, obviously, he feels that the potential is there."
Mr. Davis joined Salomon in 1989 and has been co-head of mergers and acquisitions since last April. Michael Carr was co-head with Mr. Davis and now is temporarily heading the department.
Salomon's 61-person mergers and acquisitions advisory and restructuring team generated $247 million of revenue in 1995. The investment bank ranked second in 1994 in mergers and advisory business, eighth in 1993, and fifth in 1992.
"Three out of four years, Salomon was in the top five," said Mr. Soifer of Brown Brothers. "As the co-head of mergers and acquisitions, this guy is a serious player."
Mr. Davis came to Salomon from Kidder Peabody in 1989 and covered consumer and industrial products.
He became head of acquisition finance groups and wound up his Salomon tenure as co-head of M&A after the departure of David Wittig.
Daniel Kaplan contributed to this article.
