Rumors that Credit Suisse First Boston would buy rival brokerage Donaldson, Lufkin & Jenrette (NYSE: DLJ) send DLJ's tracking stock for its online brokerage, DLJ Direct (NYSE: DIR) on a tear Tuesday. But as details of the deal are made official Wednesday, it appears DLJ Direct is left adrift.
"The transaction doesn't include DLJ Direct... and with shares running up in anticipation of the deal, we could see a fall back in the stock today," said Sean Chin, who covers the stock for Merrill Lynch.
DLJ Direct shares moved down 2.63 to 8.38 in the first 10 minutes of trading Wednesday. DLJ shares rose 4.38 to 88.38.
Analysts were still trying to figure out what would become of the tracking stock Wednesday morning, ahead of a 10:00 a.m. conference call with the company they hoped would clarify its position.
"The companies are not commenting," said Alan Weichselbaum of Gerard Klauer Mattison and Co. In his opinion, "DLJ Direct will get sideswiped, or left alone, and renamed as CSFB direct."
Merrill Lynch analyst Chin said though the short-term impact for DLJ Direct will be negligible, it could leverage CFSB's assets in the future, and "post greater revenues in the long-term, with greater financial resources, larger IPO access opportunities and greater research capacity."
On the question of whether this deal affects online brokerages, analysts were unanimous; "No. That’s the logical question, but it's important to understand that CSFB is buying DLJ -- DLJ Direct is just a freckle, or a pimple, on the deal," said Weichselbaum.
But in general, Weichselbaum added "there will be consolidation as it gets harder and harder to acquire customers."
CSFB, a unit of Switzerland's No. 2 bank Credit Suisse, said Wednesday it will buy DLJ for $90 a share, or about $12.5 billion in a move that will position it as a global player.
It’s the second big consolidating move following UBS AG (NYSE:UBS)'s agreement to buy PaineWebber Group Inc. (NYSE: PWJ). The deal would combine Credit Suisse's talent for underwriting with DLJ's merger advisory business; its Pershing stock processing operation and venture capital.
E*Trade group (Nasdaq: EGRP) rose 1.05 to 18 and Ameritrade (Nasdaq: AMTD) dropped 0.12 to 18.69.