Swiss bank set for $11bn US deal

European banks are moving into Wall Street

Swiss banking giant Credit Suisse First Boston (CSFB) has confirmed that it will buy the New York-based stockbroker Donaldson, Lufkin and Jenrette (DLJ), US media reports said.

The deal, which is expected to be worth more than $11bn, will be formally announced at 1200 GMT, the reports said.

The purchase price would be $90 a share, with half paid in cash and half in CSFB shares, US media reports said.

Shares in DLJ, which is 70% owned by French insurance giant Axa, had soared on the New York Stock Exchange on Tuesday as rumours swept the market that a deal had already been agreed.

The shares rose nearly $15 to a 52-week high of $81 as the NYSE contacted DLJ to ask for a statement.

No comment

Neither company would comment on the rumours, but several US newspapers reported that a deal was imminent.

Under that deal, CSFB would pay about $11.5 bn for DLJ, representing a 22% premium on its closing price on Monday.

DLJ chief executive Joe Roby would become chairman of CSFB while CSFB chief executive Allen Wheat would retain his position, the reports said.

Second Swiss move

If CSFB does acquire DLJ, it will be the second move into the US in two months by a Swiss bank.

In July CSFB's bitter rival, the Union Bank of Switzerland (UBS), bought US brokerage firm Paine Webber for $10.8bn from General Electric.

DLJ also operates an internet share dealing service, DLJ direct, and is a market leader in sales of corporate bonds.

The merger would combinee CSFB's talent for underwriting hot technology stock offerings with DLJ's burgeoning merger advisory business and its stock processing operation.

CSFB is a global financial services firm with $275bn in asssets and 15,000 employees in 37 countries. Its parent group, which includes Winterthur Insurance, is valued at more than $60bn.

Moves into US

US stockbrokers have been increasingly attractive as takeover targets as the number of US shareholders, already the largest in the world, continues to soar.

Many US stockbroking firms have made record profits in the past year.

The news sparked a rally in other US brokerage houses, with Lehman Brothers, Bear Stearns, and JP Morgan all rising to near 52-week highs.

JP Morgan had been considered one of the possible bidders for DLJ, as had money centre bank Chase.

CSFB has recently overtaken UBS in terms of market capitalisation, and is anxious to follow its rival into the lucrative US market.

Other big European banks like HSBC and Deutsche Bank have recently made major US acquisitions.