JBWere and Goldman Sachs merge local operations

JBWereand Goldman Sachs today formalised the merging of their Australian and New Zealand operations in a deal which sees the latter take a 45 per cent stake in the Melbourne-based financial services group.

Partners and employees of the new combined entity, Goldman Sachs JBWere, will own the remaining 55 per cent, with executive chairman of JBWere, Terry Campbell, taking the helm of the group as chairman and chief executive.

Both Campbell and president and co-chief operating officer of Goldman Sachs, John Thornton, would not reveal any specific details of the financial aspects of the deal, but it is understood that the 45 per cent stake cost Goldman Sachs in the region of $80 million.

“It’s not about cashing in on our inheritance and it’s not about selling out it’s about creating a bigger company and people like myself will not be selling shares,” Campbell told a Sydney press conference today.

According to Campbell and Thornton, the delay in formally announcing the deal, flagged months ago, was due to “ironing out many of the issues which often arise after these types of deals are announced”.

Thornton said the deal was the best option for his firm, as organic growth would have been less attractive.

“If we thought the right thing to do was just to go it alone and grow the business organically then that’s what we would have done, however though we had this rather unique circumstance where we found a firm that was so compatible with our own,” he said.

Both executives dismissed the perceived irony noted at the conference that the companies as stand alone groups prided themselves on differentiation yet once they had announced the deal argued the case for similarities in process and culture.

The new joint operation, which will have a new board of directors with equal representation from Goldman Sachs and JBWere, will not have an official head office but “business centres” in both Sydney and Melbourne.

JBWere Investment Management's Australian equities operations are not expected to be affected by the merger but its relationship with international equity manager Wellington may be in question as Goldman Sachs seeks to distribute its international products locally.

About 20 JBWere staff, out of a total of 1,300, will be made redundant with a lesser number from Goldman Sach’s 90 staff in Australia to be retrenched.

Co-chairman of Goldman Sachs Australia, Andrew Stuart, and joint managing director - corporate Craig Drummond will become co-chief operating officers of the new firm.

John Paterson and Alastair Walton will become Vice Chairmen.