Star banker replaces Cayne as Bear Stearns CEO
NEW YORK (Reuters) - Bear Stearns Cos Inc BSC.N on Tuesday turned to its star investment banker, Alan Schwartz, to replace James Cayne as chief executive and revive the company's badly damaged mortgage franchise.
While Cayne, 73, could be profane and sometimes hot-headed during his near-15 year run as CEO of the investment bank, Schwartz acted as peacemaker and in the 1990s advised on some of the biggest corporate takeovers of that time.
"Even when Alan was annoyed, he was polite about it," said Michael Ehrlich, who ran Bear's emerging markets fixed income business for a period in the 1990s.
Now, stung by big mortgage losses, Bear Stearns' future as an independent company is in serious question, some analysts say.
But Schwartz, who cemented his reputation as an unflappable adviser to the likes of former Walt Disney Co (DIS.N) CEO Michael Eisner, said he is not going to wait for a takeover bid to chart Bear's future.
"Being acquired is not a strategy," Schwartz told Reuters in a telephone interview.
He vowed to return the company to strong profitability while pushing the company's expansion overseas.
Cayne is retiring from the company, but will be non-executive chairman and remains one of Bear's largest individual shareholders. Cayne, who once sold scrap metal, became CEO in 1993 and more than tripled the company's revenue to $7 billion during his tenure.
Schwartz's path to Bear was much different.
The old Washington Senators offered him a contract to play professional baseball out of high school. Instead, he opted to attend Duke University, where he starred as a right-handed pitcher with a good fastball and slider, said Tom Butters, who was his coach.
"He was always eager to be the best. He never allowed anything to stop him from attempting to be that," Butters said.
Schwartz injured his arm, curtailing any thought of playing professional baseball and graduated in 1972. He joined Bear Stearns four years later and became head of investment banking in 1985.
As an investment banker, he built relationships with top executives at some of America's largest companies. Thanks in part to Schwartz, Bear won substantial merger-and-acquisition business in the 1990s. For example, he served as co-adviser on Viacom Inc's $9.6 billion takeover battle for Paramount Communications.
But he might be best known for advising Eisner on Disney's 1996 acquisition of Capital Cities/ABC Inc for more than $19 billion. That massive deal and others helped Bear dominate the media and entertainment M&A market with 11 transactions worth $36.5 billion in a single year.
Eisner said the best advice he got from Schwartz was simple, but necessary with so much at stake: Continued...
