Lazard stock drops after Wasserstein's death

Legendary Wall Street dealmaker Bruce Wasserstein in a 2007 photo.

PHILADELPHIA/NEW YORK (Reuters) - Shares of Lazard Ltd dropped as much as 5 percent on Thursday following the death of the investment bank's chief executive, legendary Wall Street dealmaker Bruce Wasserstein.

The shares hit a low of $40.63 in morning trade before recovering to $42.36, down 1 percent, near midday. The stock has gained 38 percent so far this year.

Wasserstein's death on Wednesday at the age of 61 left major questions about the direction and leadership of the investment bank he headed.

"The loss of Mr. Wasserstein will harm Lazard Ltd," said Richard Bove, an analyst with Rochdale Securities. "Mr. Wasserstein was the driving force behind the revival of the company, its public offering and its aggressive moves in recent years to grow once again."

"Lazard has an ample bench of very talented people that suggest that it can re-emerge as a major factor in mergers and acquisitions and restructuring after Mr. Wasserstein's death. However, one must assume that the rebound will not be immediate," Bove said.

Lazard has more than 150 senior managing directors -- more than three times as many as rivals such as Greenhill & Co Inc and Evercore Partners Inc -- giving it a deep bench of talented rainmakers to bring in business, said JMP Securities analyst Michael Hecht.

Lazard said Steven Golub, vice chairman of the company, would serve as interim CEO. Other bankers, including Gary Parr and Terry Savage, are also under consideration for the CEO post, according to The Wall Street Journal.

"Any void in leadership creates uncertainty, and the market doesn't like uncertainty," said one trader who declined to be named because he was not authorized to speak to the press.

"The stock will likely face some pressure until the succession question gets answered and the new CEO spells out a strategy," the trader said.

Oppenheimer & Co downgraded shares of Lazard to "perform" from "outperform," citing the near-term disruption of a CEO transition.

Lazard announced on Sunday that Wasserstein had been hospitalized for an irregular heartbeat and that his condition was "serious." But it said he was "stable and recovering."

On Wednesday the company said the cause of death had not been determined.

Wasserstein, known as "Bid 'em up Bruce" -- a nickname he despised -- had been involved in one of the year's biggest potential deals, advising Kraft Foods Inc in its proposed takeover of British candy maker Cadbury Plc.

"While Mr. Wasserstein was a tremendous figurehead and had a well deserved reputation as a brilliant dealmaker, we do not expect this event to have a material impact on Lazard's overall financial results," Collins Stewart analyst William Tanona said in a research report.

Forbes magazine recently estimated Wasserstein's wealth at $2.2 billion, ranking him 147th on its list of the 400 wealthiest Americans.

(Reporting by Ellis Mnyandu in New York and Jessica Hall in Philadelphia; Editing by James Dalgleish, Gerald E. McCormick and John Wallace)