Goldman Sachs is looking to divest the fixed-income portion of Spear, Leeds & Kellogg it acquired four years ago, according to a hedge fund manager with contacts at Goldman and a former trader at Spear, Leeds. Michael DuVally, spokesman for Goldman, could neither confirm nor deny the speculation.
First Tennessee Bank and E*Trade Financial are reportedly in separate discussions with Goldman for the Spear, Leeds business. Spokeswomen at those firms declined comment. First Tennessee is rumored to be the number one suitor, and market participants said they have expected the merger to be announced for some time now. The former Spear, Leeds trader expressed some ambivalence over how the two firms may fit together. "First Tennessee's model is less capital-intensive and more relationship-driven, so it should be interesting to see how the two models merge," he commented.
A headhunter added Goldman will likely keep the business if it doesn't get the price it is seeking. He declined to specify the price. Goldman bought Spear, Leeds for $6.5 billion in 2000. Known primarily as a stock specialist, the firm's fixed-income business has roughly 200 employees in offices including San Francisco, Chicago and Boston.
