Cowen Group Inc., the securities firm run by Peter Cohen, plans to buy Dahlman Rose & Co. in a stock transaction to expand into natural resources.
Cowen is adding about 100 people to its staff of 550, Jeffrey Solomon, head of its Cowen & Co. unit, said today in an interview. He declined to say how much the firm is paying for Dahlman Rose. Both are based in New York.
Smaller firms are looking for partners amid a slowdown in stock trading that led to the closure of rivals ThinkEquity LLC, Rodman & Renshaw LLC and WJB Capital Group Inc. last year. This deal will expand Cowen into new industries while allowing Dahlman Rose’s bankers to take advantage of its new owner’s ability to help companies issue debt, Solomon said.
“The challenge for some of the smaller firms like Dahlman is it’s a difficult business to scale on your own,” said Solomon, 46. The deal “enables both sales forces to really get the best of both worlds.”
Cowen, an investment-banking, trading and asset-management firm, has seen its stock drop 55 percent since 2009 to $2.69. The firm lost $14.5 million in the first nine months of 2012 and posted losses in each of the previous five years, according to data compiled by Bloomberg.
“We have to evolve into something different, which we are working very hard at doing,” Cohen, 65, said today in an interview with Bloomberg Television’s Stephanie Ruhle. “We have a very strong asset-management business. We are very active in investing our own capital.”
Dahlman Rose specializes in energy, metals and mining, transportation, chemicals and agriculture, while Cowen’s bankers mostly cover health care, technology, media, aerospace and defense, according to a statement today from Cowen. The deal is expected to be completed during the first quarter.
“The fit is just like a hand in a glove,” Solomon said. “There’s zero overlap.”
Cohen, a protege of former Citigroup Inc. CEO Sandy Weill, was head of Shearson Lehman in the 1980s. He left the company after losing a bidding war for RJR Nabisco Inc., which was bought out by KKR & Co. in 1989 for a then-record $30 billion, according to Bryan Burrough and John Helyar’s book “Barbarians at the Gate.”