FRANKFURT - Dresdner Bank AG agreed yesterday to buy Wasserstein, Perella & Co. for $1.56 billion, turning to the 12-year-old merger advisory firm to boost its investment-banking business after two failed mergers at home.
The Frankfurt-based bank will pay $1.37 billion in stock and set aside $190 million to retain key members of the 600-person staff at the firm, majority-owned by Bruce Wasserstein, one of the stars of the buyout industry in the 1980s.
The decision by Wasserstein, 52, to sell the business he co-founded 12 years ago reflects the high prices European banks are willing to pay to expand in the United States. The firm ranks 14th among merger advisers this year and expects revenue of $400 million, less than Goldman Sachs Group Inc. generates in a month.
Dresdner gains access to Wasserstein clients such as Philip Morris Cos. and Time Warner Inc. The purchase will help replenish staff after more than 200 professionals departed in the wake of a failed merger with Deutsche Bank AG in the spring. Its planned tie-up with Commerzbank AG also foundered.
"Both sides saw the strategic fit," said Leonard Fischer, chief executive of Dresdner's investment bank. "The entrepreneurial environment at Wasserstein Perella was one of the attractions for us."
The acquisition comes a week after Chase Manhattan Corp. agreed to purchase J. P. Morgan & Co.; less than a month after Credit Suisse Group AG agreed to buy Donaldson, Lufkin & Jenrette Inc. and two months after Switzerland's UBS AG said it's acquiring Paine Webber Group Inc.
Dresdner, Germany's third-biggest bank, is buying Wasserstein for 3.9 times revenue based on the company's statement that the New York-based firm will have revenue of about $400 million this year. Credit Suisse Group, by contrast, is paying about a two-times multiple to buy Donaldson, Lufkin & Jenrette based on a net revenue forecast of $6.8 billion from analysts at Morgan Stanley Dean Witter & Co.
"It looks like Dresdner is paying a high price, but it's hard to tell since we don't know Wasserstein's book value and pretax operating income," said Thomas Burnett, president of Merger Insight Inc., a research firm that tracks announced takeovers.
Wasserstein, who's selling after dropping from the top of the merger business in the 1980s, will be executive chairman of the investment bank that will be renamed Dresdner Kleinwort Wasserstein from Dresdner Kleinwort Benson.
Wasserstein shareholders will keep the firm's $1.7 billion merchant banking and private equity business, which includes investments in the Daily Deal and American Lawyer publications, and All-Clad Cookware.