German bank bidding for Kleinwort Benson

June 16, 1995|By New York Times News Service

LONDON -- Kleinwort Benson Group, the largest of a fast-dwindling corps of independently owned British investment banks, said yesterday that it was negotiating to be acquired by Dresdner Bank AG of Germany for about 960 million pounds, or $1.5 billion.

Kleinwort Benson, which is strong in both corporate finance and fund management but has never grown large enough to reach the industry's top tier, said the Dresdner Bank's proposal was for a cash deal for about the British company's current market price.

People familiar with the discussions said that Kleinwort Benson's management appeared enthusiastic about the proposal and that was likely to proceed, barring a higher offer from another bidder.

The Dresdner Bank is Germany's second-largest bank. If it acquires Kleinwort Benson, it will be following its bigger German rival, Deutsche Bank, and several other large European financial institutions in expanding aggressively into investment banking through acquisitions in London.

Indeed, though the only remaining independent British investment houses are relatively small firms like Schroders, the proposed deal underscored London's enduring strength as the European financial center.

Last month, Swiss Bank Corp. agreed to acquire the S.G. Warburg Group, the largest and most ambitious British merchant bank. In March, the ING Group of the Netherlands stepped in to buy most of Barings PLC, the venerable British investment firm that became insolvent after huge trading losses.

Deutsche Bank acquired Morgan Grenfell of London six years ago and has recently been expanding its investment banking operations through that firm.

The Dresdner Bank's interest in Kleinwort Benson has been one of the worst-kept secrets in Europe for several months, and the British investment firm's share price rose sharply on the back of the takeover rumors. On Wednesday, Kleinwort Benson's shares gained 23 pence, to 7.24 pounds, or $11.66. Yesterday, however, the shares dropped 5 pence, to 7.19 pounds, reflecting investor disappointment that the Dresdner Bank was not discussing an acquisition at a price above Kleinwort Benson's current market price.

Kleinwort Benson had once been partners with Baltimore-based Alex. Brown Inc. in Alex. Brown Kleinwort Benson Realty Advisors Corp., a consulting firm that advised pension funds on real estate matters and controlled more than $3 billion in properties. The partnership, created in 1990, was dissolved in November.

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