Merrill Lynch announced plans Monday to buy oil and gas industry bank Petrie Parkman & Co. and stake out a larger piece of the investment banking business in the exploration and production sector. Petrie Parkman, which employs 50 people in Denver, Houston and London, had planned an initial public offering of about $115 million. Terms of the Merrill Lynch deal weren’t disclosed.
The transaction immediately strengthens Merrill Lynch’s presence in the oil and gas investment business by bringing in Petrie’s team of exploration and production industry specialists. Co-founded in 1989 by Thomas A. Petrie and James E. Parkman, both previously from First Boston Corp., the company’s earnings rose 33% last year to $4.2 million, according to a Sept. 13 regulatory filing regarding the previously proposed IPO. Petrie owns 38% of the firm, while Parkman owns 29%. Parkman stepped down in June but remains on the company’s board. Petrie is the CEO and will become a vice chairman of Merrill Lynch and a member of the firm’s executive client coverage group.
Merrill Lynch said the transaction will expand its ability to provide clients with capital markets expertise, industry-focused strategic advice and a seamless ability to effectively mitigate commodity price and other risks through Merrill Lynch’s commodities trading business, Merrill Lynch Commodities Inc.
“Petrie Parkman has a strong reputation in the exploration and production industry built upon a focus on client service,” said Greg Fleming, president of Merrill Lynch’s Global Markets & Investment Banking group. “The combination of Merrill Lynch’s broad energy capabilities with the specialized oil and gas expertise of Petrie Parkman will enable us to provide outstanding services to energy clients around the world.”
Victor Nesi, head of Americas Investment Banking at Merrill Lynch, said the deal would “create one of the strongest energy investment banking teams on Wall Street, by combining Merrill Lynch’s world-class energy bankers with the specialized exploration and production expertise of Petrie Parkman.”
Petrie Parkman’s mergers and acquisitions, asset and private company divestitures, and corporate finance businesses will be part of the Energy and Power Group of Merrill Lynch’s Global Markets & Investment Banking group. Petrie Parkman’s equity research staff will become part of Merrill Lynch’s Global Securities Research & Economics Group. The transaction is expected to close in the fourth quarter of 2006 and is subject to regulatory approvals.
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