Because of a limping stock market, business on Wall Street is on the ropes. But while many brokerages and investment houses have lost ground, several regional outfits have retained their allure. One that has caught the eye of U.S. and Canadian institutions: Tucker Anthony Sutro (TA ), a full-service broker, investment banker, and asset manager, whose stock has leaped, from 16 in early April to 26 on July 18, on rumors that it is on the block.
Whispers say that a buyout is in the offing from Royal Bank of Canada--tops in Canada in assets--or from Wells Fargo, the seventh-largest U.S. bank holding company, with more than $260 billion in assets. "Tucker is in advanced talks with Wells Fargo and Royal Bank," says an investment pro close to the talks. Tucker has hired Goldman Sachs as its adviser. One source says Tucker's board will meet shortly to act on a proposal from either Royal or Wells Fargo. He figures the bid will be 30 to 37 a share, or 2 to 2 1/2 times Tucker's estimated book value of $15 a share. He expects an announcement on a deal in a week or so.
Analyst Lauren Smith of Keefe, Bruyette & Woods says she wouldn't be surprised if Tucker were acquired--because, as she says, "there aren't many independent retail brokerages around with meaningful size and distribution outlets." Tucker has about 1,000 brokers, with operations in the Northeast and on the West Coast. In 2001, she figures Tucker will earn $1.40 a share--down from 2000's $1.94 because of the tough market--but she foresees $2.10 in 2002, helped by cost savings from its restructuring. Tucker, Royal Bank, and Wells Fargo declined comment.
By Gene G. Marcial