The decision by stockbroking firm, Butler & Briscoe, to merge with financial services company, Dolmen Securities, creates the fifth largest brokerage in the Republic.

The two companies yesterday confirmed that they are to merge and said the new entity will focus on winning private client and institutional business from its four larger rivals.

While the deal is termed a merger, it is essentially a takeover of Butler & Briscoe by Dolmen, although the consideration involved is not being disclosed by the parties.

The beneficiaries of the deal are the partners in Butler & Briscoe, Mr Bryan O'Neill, Mr David O'Brien, Mr Leonard Abrahamson, Mr David Beaton and Mr Fergus Briscoe.

Mr O'Neill becomes chairman of the new company to be known as Dolmen Butler Briscoe, while the others become executive directors. Dolmen Butler Briscoe, will be part of Dolmen Securities Ltd, which also includes Dolmen Corporate Finance.

Butler & Briscoe currently has about 7,000 active private dealing clients and Dolmen brings approximately 3,000 to the arrangement. According to Mr Paul McGowan, one of Dolmen's founders and now joint managing director of Dolmen Butler Briscoe, the company intends to set up an institutional equity desk within the next year.

He added that it will provide an independent service "which allows clients to deal with non-bank linked stockbrokers backed by a strong European parent". ERGO, the second largest insurance group in Germany, has a 50 per cent stake in Dolmen Securities.

The new company might "down the line" be interested in making acquisitions, possibly in Europe, but has no interest in acquiring MMI stockbrokers, which is currently looking for investors.

"We have enough on our plate at the moment, we need time to bed this deal down," said Mr McGowan. He said the backing of ERGO gives the company the capital resources to make acquisitions.

Dolmen has been expanding aggressively since it was set up over three years ago and has some £180 million in funds under management.

It was responsible for flotations on the DCM and AIM markets by Rapid Technology and the precision measurement company, Suparule. Butler & Briscoe is one of the oldest brokerages in the Republic and up until five years ago was the official Government broker. Its main strength is in the area of private client business.

Mr Ronan Reid, joint managing director of the new company and the other founder of Dolmen, said there are between 50,000 and 60,000 active private dealers to be targeted by the company, with this rising in future years as prosperity increases. Dolmen Butler Briscoe intends to provide "a suite of quoted investment products", including portfolio management, tax driven products like self administered pension schemes and the normal share dealing service. Additional services like private fund raisings and pre and post IPO (initial public offering) fund raisings will also be offered.

The combined company will employ about 50 people, 18 of which will be equity dealers. The deal will be completed this month, although it will require approval from the Central Bank and the Irish stock exchange.