Credit Suisse First Boston today said it has agreed to acquire
Donaldson Lufkin & Jenrette in a stock and cash deal worth $11.5 billion, with the goal of creating a powerhouse in the investment banking world.
Under the agreement, CSFB will pay DLJ's public shareholders $90 in
cash for each share. DLJ has about 128 million primary common shares
outstanding, of which approximately 30 percent are held by the public,
including DLJ employees. AXA Financial, DLJ's largest shareholder, will
receive $5.75 billion in CSFB stock, plus $2.39 billion in cash.
The transaction does not include DLJdirect, the online arm of DLJ
investment bank, or other preferred stock and debt securities. The
tracking stock for DLJdirect will continue to trade on the New York Stock Exchange under the ticker symbol "DIR."
Upon completion of the transaction, the companies said they will operate under the Credit Suisse First Boston name. DLJ chief executive Joe Roby will serve as chairman of the executive board, while CSFB chief executive Allen Wheat will be CEO of the combined company.
The two companies said they will have total combined assets in excess of $600
billion and more than 26,500 employees.
The transaction is expected to close in October upon completion of a tender
offer for DLJ shares that will begin next month. The transaction has been
approved by the boards of CSFB, DLJ, AXA Financial and the AXA Group.
Online brokers such as DLJdirect, Ameritrade and E*Trade have been hit particularly hard due to the
overall market turmoil that has battered technology stocks. Though DLJdirect's loss in its latest quarter was wider than expected, the
online broker still reported a
40 percent jump in quarterly revenues.
In recent months, DLJdirect, which ranks among the top 10 online brokerages, has been on an aggressive marketing and advertising push to ensure a
strong position in the market.