Wall Street's best-kept secret
In the weeks following the announcement of Morgan Stanley's merger with Dean Witter, DLJ's share price shot up from $36 to $46. It is not, jokes chairman and chief executive John Chalsty, because investors suddenly like the colour of his eyes. DLJ is the perennial acquisition target. It is small and has a comparatively low capitalization. Its stockholders' equity of $1.64 billion at the end of 1996 make it financially digestible. It has a strong position in key US securities and investment banking sectors but next to nothing overseas. The excited potential acquirer might be forgiven for overlooking the small technical matter of its already having an owner.
In 1985, Equitable Insurance bought the whole of DLJ. It still owns 80%, the rest having been floated late in 1995 at $27 a share in a public sale mostly subscribed to by DLJ employees. Equitable in turn has, since the early 1990s, been majority owned by French insurer Axa, following a recapitalization engineered by Richard Jenrette, a founder of DLJ in 1959 and chairman of Equitable from 1990 until last year. Thus DLJ is technically a French-owned US investment bank.