(July 17 – 15:15 ET) – Lehman Bros. Holdings Inc. is buying the private client business of SG Cowen, as rumours suggested last week.
Lehman didn’t disclose the terms of the deal that will see it pick up about 130 brokers from SG Cowen, bolstering its retail sales force to 455. The SG Cowen brokers will add about US$10 billion of assets under management, bringing Lehman’s retail arm to more than US$40 billion. SG Cowen has branches in Albany, Boston, Chicago, Cleveland, Dayton, Houston, New York, and San Francisco.
Lehman has recently been ramping up its retail division, including the purchases of CIBC World Markets’ private client business in London, England. Richard Fuld Jr., chairman and CEO of Lehman, says “the acquisition underscores the firm’s commitment to continuing its successful strategy of aggressive growth and further diversifying its business mix.”
Societe Generale, SG Cowen’s parent, took the opposite tack, believing it couldn’t build a business to compete with the Merrill Lynchs of the world. It will focus instead on investment banking, particularly in the high tech and health care sectors.
John Kelly, chief operating officer of SG Cowen said, “It became clear that to be competitive we would need to quickly build significant scale. Lehman Brothers approached SG with an attractive strategic proposal to leverage our existing platform as part of their commitment to expanding their U.S. retail brokerage presence. We are excited about what this transaction will bring to our clients and employees.”
Last week UBS AG bought PaineWebber Group Inc. to speed its entry into the lucrative U.S. market for high net worth investors, Lehman was reportedly one of its possible targets, too.
-IE Staff