CSFB Boosts Bid for Online Unit
Credit Suisse First Boston agreed Wednesday to pay $110 million to buy back its online brokerage unit, raising the price 50% after disgruntled shareholders sued the investment bank over the lower offer.
The securities unit of Credit Suisse Group said it will pay $6 a share for the 18.4 million publicly traded shares of CSFBdirect, up from a $4-a-share offer March 26.
The stock sold for as much as $43 in 1999.
On Wednesday the shares (DIR) soared $1.26 to $5.94 on the NYSE.
“They needed to get this resolved,” said Richard Brown, president of Northaven Management, the brokerage unit’s second-largest investor, with 923,000 shares. “They started pretty low, but this is a reasonable price.”
CSFB acquired the business, formerly known as DLJdirect, with the purchase of Donaldson, Lufkin & Jenrette Inc. last year.
Investors have been confident Credit Suisse would raise its price above $4 a share for the 17% of the unit it didn’t already own: Since the initial offer, the stock has never traded below $4.22.
CSFBdirect, along with other online brokers, has been struggling amid a slump in trading. The stock market’s plunge left individual investors reluctant to trade online, crushing profits at the firms that grew as U.S. stocks boomed.
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