Cowen Group (Cowen), a Nasdaq-listed financial
services provider, shocked the shipping industry Monday after striking a definitive
agreement that set the stage for the acquisition of Wall Street compatriot Dahlman Rose & Co.
In a statement, Cowen said the all-stock
transaction was approved by the boards of both companies and is due to close by
the end of the first quarter but did not shed light on pricing.
Chief executive Peter Cohen told
investors that Dahlman’s areas of expertise, like energy and transportation, will
provide a “strong complement” to the sectors in which it operates.
Cohen identified health care, technology, media, telecommunications,
consumer, aerospace, defence and industrials as his company’s core segments.
“Through this combination, Cowen will gain sector
focus in new verticals which we believe will be active areas for capital raising
over the foreseeable future,” he continued.
“In addition, Dahlman Rose’s domain expertise and
focus on fundamental research dovetails with Cowen’s philosophy of excelling in
our chosen sectors.”
Jeffrey Solomon, chief executive of affiliate Cowen
& Company, described the deal as a “transformative transaction” that will
add “depth and breadth” to the group’s research, sales and trading and
investment banking teams.
Cowen spots "major untapped revenue opportunity"
In an investment presentation filed with securities regulators, the company said the heads of its
banking, global capital markets, equities and research units will “work
closely” with their Dahlman counterparts in an effort to ease integration.
Cowen believes the acquisition will help it exploit
what was described as a “major untapped revenue opportunity” in the chemicals,
energy, metals and mining, precious metals, transportation and maritime sectors.
The group pointed out that $105bn worth of debt and
equity was raised by non-bulge banks on behalf of clients within Dahlman’s core
markets between 2010 and 2012.
Cowen claims the three-year total represents roughly $2bn in fees from 974 transactions that were valued at approximately $107m on average.
“Dahlman’s equity fees during this period represented
less than 3% of the overall fee pie,” Cowen continued, adding: “With no debt
practice, Dahlman Rose generated nominal fees during this period.”
At last check, Cowen boasted a team of more than 130
sales and trading specialists and 80 investment banking professionals in addition to 29 research analysts who cover over 400 companies.
According to regulatory filings, Dahlman’s ranks include
34 sales and trading professionals and 11 equity researchers who follow 270
companies- including the majority of the US-quoted tanker, bulker and containership
operators.
News of the acquisition, which is still subject to regulatory
approval, follows the recent departure of veteran equity analyst Omar Nokta,
who left Dahlman’s shipping research division less than three weeks ago.
Observers note
that the Cowen acquisition will likely result in a payday for Lovell Minnick
Partners, a private equity firm that paid $40m for what was widely believed to
be a 25% stake in Dahlman back in 2010. It ploughed another $10m into the company two
years later.
You can read the SEC filing and investor presentation in full by clicking on link located under the Related Media section to the right of this article
