SoundView bought out.. so much for their "downgrade"
Monday November 1 12:32 PM ET
Wit Capital To Buy SoundView For $320 Million
By Gilles Castonguay
NEW YORK (Reuters) - Online investment bank Wit Capital Group Inc (Nasdaq:WITC - news). said Monday it would buy investment bank SoundView Technology Group for $320 million in stock and options, sending its share price soaring nearly 30 percent.
Wit Capital said the deal would raise its profile as an underwriter of stock offerings and expand its research coverage of Internet and other technology companies.
Under the terms of the definitive agreement, Wit Capital would buy all of SoundView's fully diluted shares with newly issued stock and options at an exchange ratio based on its Oct. 29 closing price of $17.56.
The exchange ratio would be subject to adjustment for changes in Wit Capital's share price with a range of $15.56 to $18.56, but would not be ``adjustable for changes beyond these levels,' it said in a statement.
Shares in Wit Capital, one of the first online brokers to let individual investors participate in initial public offerings, rose to a lifetime high in Monday morning trade. The shares climbed 4-15/16 or 28.11 percent to 22-1/2, making it one of the leading percentage gainers on the Nasdaq market.
The deal was also well received by analysts.
``(It gives) them better negotiating clout with issuers,' said Geoffrey Beard of Thomas Weisel Partners. ``They could command a higher percentage of management fees.'
Beard, who has a buy rating on the stock, said Wit Capital would be able to tap not only its individual investor base but also SoundView's clientele of institutional investors to generate capital for companies that want to issue stock.
Wit Capital said SoundView would boost nine-month revenues to $127 million from $27 million on a combined basis.
And its co-chief executive, Ron Readmond, told a conference call that the deal would be ``highly accretive,' but did not elaborate.
The board of directors of each company and SoundView's shareholders approved the deal, which was expected to close in January 2000, said Wit Capital. ``Completion is contingent on Wit Capital shareholder approval, regulatory approval and other customary closing conditions.'
Based in Stamford, Conn., SoundView, a specialist in the Internet and the technology sector, has been employee-owned since it was spun off by information technology research firm Gartner Group Inc (NYSE:IT - news). in 1985.
Its chief executive, Russell Crabs, would take a seat on Wit Capital's board of directors, while Curt Snyder, its chief operating officer, would become chief financial officer of the combined company, it said.
Bernie Siegel, who was chief financial officer of both Wit Capital Group Inc., the parent company, and Wit Capital Corp., the online investment banking firm, would keep his post at Wit Capital Corp.
Based in New York, Wit Capital, which is nearly 20-percent owned by investment bank Goldman Sachs Group Inc., has been expanding its operations overseas since it went public on June 4.
Last week, it said it had agreed to form a European investment bank with Irish provider of Internet financial services provider enba Plc.
In August, it set up an online investment bank joint venture in Japan.
Wit Capital To Buy SoundView Technology (November 1) |
