Wasserstein's death sends Lazard shares lower

posted: 42 DAYS 13 HOURS AGO

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NEW YORK -Shares of Lazard Ltd. are dropping the morning after the death of CEO Bruce Wasserstein, as investors worry about the investment bank's future without its legendary leader.

"The loss of Mr. Wasserstein will harm Lazard," wrote Richard Bove of Rochdale Securities in a note to investors Thursday. Calling him "the driving force behind the revival of the company," Bove said Wasserstein's "long history of success in the investment banking sector allowed him to build a clientele list that it will be hard for Lazard to maintain."

Still, he maintained his "Buy" rating on the stock, saying the mergers and acquisitions advisory firm will still be a major player in an M&A market that is soon to be "explosive."

Wasserstein has been a marquee name on Wall Street since the 1980s, working on landmark deals such as the Kohlberg Kravis Roberts' takeover of RJR Nabisco, and the Morgan Stanley-Dean Witter and AOL-Time Warner mergers. Most recently he was advising Kraft Foods Inc. on its unsolicited $16.7 billion takeover bid for British candy maker Cadbury PLC.

Fox-Pitt Kelton analyst David Trone said Kraft would likely keep Lazard on board "if for no other reason than the political incorrectness of dismissing them." He said Wasserstein's death would not likely result in a material direct loss of revenue for the firm.

Wasserstein is being replaced, for now, with Lazard vet Steven Golub, 63, the company's vice chairman, who has an accounting background and was once the CFO. "The interim title will likely raise concerns that another leadership change could occur," wrote Keefe Bruyette & Woods analyst Lauren Smith.

These CEO transitions are typically rocky, said Chris Kotowski of Oppenheimer, and recruitment can be difficult until a permanent leadership team is in place. While he stressed that Lazard is a "broad-based business that is not overly dependent" on Wasserstein, he downgraded the firm's shares to "Perform" from "Outperform" given the uncertainty around the company's management.

Wasserstein's heirs could also be selling large amounts of company stock in upcoming secondary offerings, added Trone. A dropping share price would be a good opportunity to buy Lazard shares, he said.

Lazard shares dropped $2.16, or 5 percent, to $41.11 on heavier than normal volume in morning trading. They've changed hands between $19.17 and $44.62 this year.

2009-10-15 11:13:26