Phibro to acquire Salomon Brothers

NEW YORK -- Salomon Brothers, the nation's largest private investment bank, is being acquired for about $250 million in securities by the worldwide commodities trading firm of Phibro Corp.

The merger, which stunned Wall Street since no hint of it had leaked out prior to the announcement Monday, is the third big merger in the securities industry this year. It becomes effective Oct. 1.


Both Phibro and Salomon are basically trading companies, but Phibro trades commodities while Salomon trades money. Phibro claims to be the largest trading firm in the world.

Monday's announcement came amid rumors that Salomon Brothers, a privately held firm founded 71 years ago, had suffered losses of up to $200 million in July and that the firm had laid off dozens of employees. There also were rumors the firm would liquidate its huge inventory of unsold bonds.

A spokesman firmly denied both rumors, saying Salomon would begin operations as an autonomous Phibro subsidiary with a net worth 'in excess of $300 million.'

'We are not liquidating our inventory,' the spokesman said, 'There also is no truth to the rumors of our losses. We had a very profitable 10 months, including July. We laid off about 21 people out of 2500 we employ.'


Phibro, which markets some 150 commodities worldwide, reported capital and surplus in excess of $1.35 billion and profits of $128 million in the first half of 1981.

Under the merger, Salomon's 62 partners ultimately will acquire 9 million shares of Phibro common stock.

John H. Gutfreund, Salomon general partner, will become co-chairman of Phibro and will continue as chief executive of Salomon.

'We got married because Phibro is pre-eminent in commodities trading the way we feel we are pre-eminent in stock and bond trading,' Gutfruend said. 'If you view money as the ultimate commodity, we will add a dimension to each other.'

David Tendler, Phibro chairman, said, 'It was absolutely a natural direction for us to take. We are traders and they are traders. A combination like this means further growth.'

Phibro's corporate name will be changed 'in due course' to reflect the combined business, he said.

Phibro is best known for its Philipp Bros. division, which was spun off by Engelhard Chemicals and Minerals last spring. About 28 percent of the firm is owned by Minnorco, a Bermuda-based firm controlled by Anglo-American Corp., the South African minerals and diamond conglomerate.

Earlier this year, two leading securities concerns, Bache Group Inc. and Shearson Loeb Rhoades Inc., were taken over -- Bache by Prudential Insurance Company and Shearson by American Express.


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