NEW YORK, OCT. 10 -- European banking giant Credit Suisse will emerge as the foreign concern with the biggest presence on Wall Street after a planned $1.1 billion merger of one its affiliates with the investment firm First Boston Inc.
In the complicated three-way deal announced over the weekend, First Boston, a leading securities trader and merger adviser, will be bought by a group that includes First Boston's employees, Credit Suisse and an unidentified third party.
Its operations will be joined with London-based Credit Suisse-First Boston, a leading international bond dealer owned jointly by Credit Suisse and First Boston.
The companies said the merger was aimed at creating a global investment banking giant.
"First Boston, CSFB and Credit Suisse are taking a decisive step forward to create a powerful worldwide firm," First Boston and Credit Suisse said in a joint statement.
The new privately owned company is to be called CS First Boston and will be headed by First Boston's chief, Peter Buchanan. But he will retire next September and hand control over to John Hennessy, who is the chief executive of Credit Suisse-First Boston.
The ownership breakdown of CS First Boston will be 44.5 percent Credit Suisse, 25 percent management employees of First Boston and Financiere Credit Suisse-First Boston, and 30.5 percent unnamed third party investors.
Shareholders in First Boston will be bought out for $52.50 each.
The new CS First Boston will be a finance industry heavyweight active worldwide in everything from raising capital and merchant banking through mergers and takeovers to selling and trading in securities.
Credit Suisse-First Boston was formed in 1978 as a joint venture between First Boston and Credit Suisse, the third-biggest Swiss bank, largely to operate in the London-based market in Eurobonds -- internationally issued and traded bonds.
The companies said problems have arisen in an increasingly global capital market, leading to strains over the geographic split in the groups' operations. First Boston and Credit Suisse-First Boston found themselves competing with one another, they said.
But Wall Street insiders also pointed to signs of internal strife at First Boston. The power struggle was complicated by the close alliance with Credit Suisse, which indirectly owned 40 percent of First Boston by virtue of its 60 percent controlling share of Credit Suisse-First Boston.
First Boston was hit this year by the defections of its two investment banking heads, Bruce Wasserstein and Joseph Perella, a team that analysts said had helped the company gain a leading role in the U.S. merger and acquisition business.
In the aftermath of the merger, Credit Suisse will greatly expand its direct role in running First Boston, analysts said.
First Boston worked in North America, CSFB in most of the rest of the world and Credit Suisse in Switzerland.
While those geographic distinctions will not be obliterated by the merger, there will be greater efforts to coordinate and combine the operations, analysts said.
But William Galvin, First Boston's corporate communications director, said the companies did not anticipate any layoffs.
First Boston said there will be three separate operating entities -- The First Boston Corp. in the Americas, Financiere Credit Suisse-First Boston in Europe, the Middle East and Africa, and CS First Boston Pacific, a unit that will be formed next year and will operate in the Pacific, Australia and Asia.
First Boston, which in 1934 became the first U.S. investment bank to go public, said developments in world financial markets had led to the changes in structure.