NEW YORK -- First Boston Corp. and its London-based affiliate, Financiere Credit Suisse-First Boston, have agreed to merge in a $1.1 billion deal expected to be completed by the end of the year.
Under the agreement, which was reached over the weekend after lengthy negotiations, the merged company -- CS First Boston Inc. -- will be taken private. Shareholders will be paid $52.50 a share in cash, or a total of $1.1 billion.
First Boston stock was up 75 cents a share to $49.625 in afternoon trading on the New York Stock Exchange. The New York-based investment banking firm's stock jumped $2.875 a share on Friday, following speculation the price would be around $54 a share.
Major management changes will result from the merger.
For one, Peter Buchanan, 54, president and chief executive officer of First Boston, will hold the same titles at the new company, but will retire in September 1989.
At that time, John Hennessy, CEO of Financiere Credit Suisse-First Boston (CSFB), will be nominated to succeed Buchanan.
The merged company will be 44.5 percent owned by CS Holding, an associate of Credit Suisse, a huge Swiss banking conglomerate that ranks among the top 10 in the world based on equity. Management employees of First Boston and Credit Suisse-First Boston will own 25 percent of the new company, and third-party investors will own the remainder, 30.5 percent.
CS First Boston Inc. will make its headquarters in New York.
'First Boston, CSFB and Credit Suisse are taking a decisive step forward to create a powerful worldwide firm with a full range of investment banking activities -- including capital raising, mergers and acquisitions, securities sales and trading, securities research, asset management and merchant banking,' said a joint statement issued by the parties involved.
The merger will help First Boston and CSFB 'overcome strains that have developed in their relationship because of the far-reaching changes in the global marketplace.'
CS First Boston will have three operating units:
-The First Boston Corporation of the Americas, which will oversee North and South America, is to be headed by William Mayer, now a managing director of First Boston.
-Financiere Credit Suisse-First Boston in Europe, the Middle East and Africa. Hans-Joerg Rudloff, currently vice chairman of Credit Suisse-First Boston, will run the unit.
-CS First Boston Pacific. The unit, which will oversee the Far East and Australia, is expected to be formed in 1989. Its management is to be announced next year.
