Bankers Trust Aims for M&A Business With Purchase of Boutique Adviser

Bankers Trust New York Corp., moving to diversify beyond trading businesses, said Wednesday it would acquire Wolfensohn & Co., a prominent merger advisory boutique.

The two companies plan to form a new unit, BT-Wolfensohn M&A and Corporate Advisory Group, that will include the 10 partners from Wolfensohn and the boutique's 55-person staff.

Terms of the deal were not disclosed, but market sources said Bankers Trust probably paid more than $200 million for New York-based Wolfensohn, which last year ranked as the nation's ninth-largest mergers and acquisitions adviser. Until now, Bankers Trust has had a minimal presence in that field.

Bankers Trust's stock soared on the news. The shares closed at $77.125, up $3.625.

Since joining Bankers Trust, chairman and chief executive Frank Newman has emphasized moving the bank away from its core businesses of derivatives and other trading activities. Those often-volatile businesses have proved very troublesome for the company during the past two years.

"The company has been working on its relationship orientation for quite a while but this transaction will lend considerable credibility to that effort as well as adding some investment grade relationships and some very skilled individuals," said Diane Glossman, a bank analyst at Salomon Brothers Inc.

Wolfensohn advised in a number of large mergers in the past year, including such marquee deals as the Chase Manhattan Corp.- Chemical Banking Corp. megadeal and Walt Disney Co.'s buyout of Capital Cities/ABC Inc. deal with Walt Disney Co.

Wolfensohn is said to have 20 clients on retainer around the world, including NationsBank Corp., Chase Manhattan, and HSBC Holdings.

Paul A. Volcker, the former Federal Reserve chairman who now heads Wolfensohn, will act as a consultant to Mr. Newman and other senior executives at Bankers Trust, and he will serve on the board of directors, the bank said.

"Getting Paul Volcker on the board is probably worth a lot to Bankers Trust. He is the ultimate blessing in terms of the issues they hope are now behind them," said Gerard Smith, a managing director at UBS Securities.

The merger follows closely on the heels of the settlement between Bankers Trust and Procter & Gamble Co. over two failed derivatives contracts.

Bankers Trust said the Wolfensohn transaction would not have a material financial impact.

James D. Wolfensohn, the founder of the firm who left last year to run the World Bank, was said to have had a clause inserted in his contract that would treat him like a general partner if the firm was sold, so he presumably would have received an attractive settlement in the sale of the company.

Experts said that the acquisition price surely exceeded the $135 million that Natwest Markets, a division of National Westminster Bank PLC, paid when it bought Gleacher & Co.

Bankers Trust's stock rose $3.375 to $77.125, a new 52-week high.

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