For Release: IMMEDIATE
BANKERS TRUST AND ALEX. BROWN AGREE TO MERGE
Combined Firm Will Offer Full Range of Global Investment Banking Capabilities
Merger Creates the Leading Financial Services Firm for High-Growth Companies
New York, April 6, 1997 -- Bankers Trust New York Corporation (NYSE: BT)
and Alex. Brown Incorporated (NYSE: AB) announced today that they have signed
a definitive agreement to merge. The combined company will have strong
capabilities in every aspect of financing and advisory services and will be
the pre-eminent provider of these services to growing companies and those in
rapidly changing industries.
Under terms of the agreement approved unanimously by both boards of
directors, each Alex. Brown common share will be exchanged for 0.83 shares of
Bankers Trust common stock. Based on the April 4 closing price of Bankers
Trust and Alex. Brown's primary shares outstanding, the merger will have a
value of approximately $1.7 billion. On that same basis, Alex. Brown
shareholders will own approximately 20% of Bankers Trust's shares outstanding
after completion of the merger. The transaction is expected to be tax-free
to shareholders and accounted for on a pooling-of-interests basis.
"This merger is a superb fit that significantly enhances the combined
firms' ability to provide our clients with a full range of superior services
around the world," said Frank Newman, chairman of the board of directors and
chief executive officer of Bankers Trust. "In a single, integrated firm,
clients will have the benefit of Bankers Trust's expertise in syndicated bank
lending and high-yield bonds and Alex. Brown's strength in equities research
and underwriting. We will greatly extend our advisory capabilities by adding
Alex. Brown's merger and acquisition franchise with dynamic growth companies
to BT Wolfensohn's M & A franchise. Alex. Brown's highly regarded services
for high net worth investors offer significant opportunities to broaden our
private banking activities.
"Alex. Brown is one of the most successful and respected investment banking
firms in the country. With this merger, we gain the leadership, talent and
experience of 'Buzzy' Krongard, Mayo Shattuck and some of the best and
brightest people in this business. By accelerating our growth and expanding
our scope of activities, this combination will offer the talented people in
both firms enormous professional opportunities in the years ahead," concluded
A.B. Krongard, chairman of the board of directors and chief executive
officer of Alex. Brown, said: "We are extremely excited to be joining a firm
whose capabilities support and extend our core strengths. By combining the
oldest investment banking firm in America with a premier global financial
institution known for innovation, we are creating an exceptional organization
ideally positioned to serve our clients. Above all, our firms share a common
culture that prizes integrity, excellence, and commitment to client service."
Bankers Trust's board of directors intends to elect Mr. Krongard a director
and a vice chairman of the board of Bankers Trust New York Corporation. He
would join the board after the merger is completed. In addition, Mayo A.
Shattuck III, currently president and chief operating officer of Alex. Brown,
will be named a vice chairman of Bankers Trust New York Corporation. At the
most recent meeting of Bankers Trust New York Corporation's board of
directors, Yves deBalmann, co-head of investment banking and head of risk
management services; Richard H. Daniel, chief financial officer; and R. Kelly
Doherty, head of sales and trading and the firm's Latin American activities
were elected vice chairmen of the Corporation. Mr. deBalmann and
Mr. Shattuck will jointly lead the integration of the investment banking
businesses of the two firms. Alex. Brown's headquarters will remain in
Bankers Trust and Alex. Brown believe the combined firm will generate
significant additions in revenue from providing existing clients of the two
firms with an expanded range of services and from the enhanced ability of
the merged firms to attract new clients. In particular, additions are
expected in equity underwriting, trading and sales; in high yield finance;
in risk management; and in mergers, acquisitions and advisory services.
The firms also expect to benefit from the expanded range of capabilities
in private banking, brokerage and investment management.
The combined company expects to achieve annualized expense savings of
approximately $80 million resulting from elimination of redundant operations
within 12 months of close. At closing, Bankers Trust expects to recognize a
one-time charge of approximately $80 million for restructuring and related
costs. Bankers Trust believes the transaction will be accretive to earnings
per share in the second year after close.
In connection with the transaction, Alex. Brown granted Bankers Trust an
option, exercisable under certain conditions, to acquire shares representing
19.9% of Alex. Brown's outstanding shares. Bankers Trust has granted Alex.
Brown an option to purchase up to 10% of Bankers Trust's outstanding stock,
exercisable under certain conditions.
The merger, which is expected to be completed by the fourth quarter of 1997,
is subject to customary closing conditions, including certain regulatory
approvals and shareholder approvals.
Bankers Trust is the seventh largest U.S. banking company with assets of
$120 billion and has offices in more than 55 countries with over 15,000
employees. Through its subsidiaries, which include Bankers Trust Company,
BT Securities Corporation and Bankers Trust International PLC, the firm
provides investment banking, risk management, sales and trading, investment
management and transaction processing services to more than 11,000 clients
In 1996, Bankers Trust ranked as the third largest underwriter of high
yield debt rated single-B and below and was the second largest arranger of
highly leveraged syndicated loans. Bankers Trust has more than $220 billion
of assets under management for institutions, individuals, and families
worldwide. It provides custody services for approximately $1.5 trillion of
Founded in 1800, Alex. Brown has 2,700 employees in 22 offices in 13 states
and the District of Columbia, and representative offices in London, Geneva,
and Tokyo. In addition to the company's principal office in Baltimore, Alex.
Brown has offices in New York, San Francisco, Los Angeles, Boston, Chicago,
Dallas, Atlanta, Philadelphia, and Washington, DC.
Alex. Brown has approximately 100 equity analysts covering more than 800
stocks, with more than 1,000 institutional clients and 115,000 high net worth
clients. In 1996, Alex. Brown ranked as the largest underwriter of initial
public offerings in terms of number of transactions and the fifth largest
underwriter by dollar value. The firm was the largest underwriter of common
stock of technology companies, based on the number of transactions, and the
fourth largest underwriter based on dollar value of transactions. In
healthcare, Alex. Brown was the third largest underwriter of common stock in
terms of number of transactions, and the fourth largest underwriter based on
dollar value. Alex. Brown has $12.5 billion of assets under management.
This news release contains estimates of future operating results for both
Bankers Trust New York Corporation and Alex. Brown Incorporated. These
estimates constitute forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995), which involve significant
risks and uncertainties. Actual results may differ materially from the
results discussed in these forward-looking statements. Factors that might
cause such a difference include, but are not limited to: (1) expected cost
savings from the merger cannot be fully realized or realized within the
expected time frame; (2) revenues following the merger are lower than
expected; (3) competitive pressures among financial institutions increase
significantly; (4) costs or difficulties related to the integration of the
business of Bankers Trust and Alex. Brown are greater than expected;
(5) general economic conditions, either nationally or in the states in which
the combined company will be doing business, are less favorable than
expected; and (6) legislation or regulatory changes adversely affect the
businesses in which the combined company would be engaged.
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For more information, contact Doug Kidd, Bankers Trust, (212) 250-7225.
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