Merrill Lynch plans poaching raid on UK rivals

Merrill Lynch, the giant US investment firm, is poised to launch a large-scale poaching raid on the staff of UK-based competitors, industry sources said yesterday, as it emerged that top media analyst Neil Blackley was leaving Goldman Sachs for Merrill Lynch at an estimated pay package worth as much as pounds 200,000 a year.

The move was only the first in a series of expected departures from big UK firms, as Merrill Lynch, which owns the UK stockbroker Smith New Court, aims to bolster its corporate finance and financial analysis teams in London.

Sources indicated that the oils sector could be a likely target, as the US-owned firm looks to improve its research standing in those areas where it is considered weaker than the general market.

Mr Blackley, who takes his colleague Meg Geldens with him to Merrill Lynch, was rated fifth in the Extel survey of research this year. He and then-partner Guy Lamming, were the top-rated team when they worked for James Capel three years ago. They went to Goldman Sachs as a team in 1993, but Mr Lamming left to join SBC-Warburg last year.

The attraction of Merrill Lynch to Mr Blackley lay in the combination of international distribution and its strong UK base through Smith New Court, sources close to the analyst said yesterday.

Goldman Sachs had originally sought the services of Mr Blackley and Mr Lamming to increase its chances of winning lucrative corporate finance deals in the active media sector. The high level of merger activity in the industry has led many large firms to establish dedicated and highly paid teams to co-ordinate research and to bid for corporate finance accounts. Even small boutique operations have beefed up their commitment to media.

Mr Blackley was believed to have been in discussions about becoming a partner at Goldman Sachs. It was suggested yesterday that his package at Merrill Lynch was far less than he stood to gain by staying at the rival US firm, although it was unclear whether a partnership had been formally offered.

Goldman sources indicated yesterday that the departure had been amicable. "We were sorry to see him go - he's a good lad," one source said. The firm intends to mount an international search for a replacement, and confirmed yesterday that it continued to view media as a core sector.

The game of musical chairs in the City has heated up in recent months, with Mr Blackley's predecessor at Merrill Lynch, Richard Dale, jumping ship with his partner David Forster, to join Salomon Brothers earlier this year for a package estimated at pounds 500,000 a year for the two. Merrill Lynch, which struggled for several months to replace the highly-rated Dale-Forster team, has been particularly active in the head-hunting market, pinching Stephen Reitman, the highly-rated automotive analyst at UBS, earlier this year. Said a Merrill insider: "You can be sure there will be more announcements."

The top media slot at Merrill had been left vacant for several months, following the departure of Messrs Dale and Forster, who had balked at the heavy hand of the New York office and the resulting friction between headquarters and the Smith New Court rump. Their resignations coincided with a minor flood of departures early in the year.

Merrill Lynch subsequently sought to regain the advantage, signalling it would spend freely to develop leading-edge research capabilities. "We want the lot," said a company insider.

The campaign to secure fresh talent is being viewed by some City observers as slightly desperate. The critics suggest the large US firm has yet to soothe the tensions between its New York managers and the UK staff, particularly those who remain from the Smith New Court days.

Mr Blackley is to spend a month on "garden leave", and will join his new firm toward the end of September.