Magazine article American Banker

First Union Muscles UpIn Brokerage with $1B Deal

Magazine article American Banker

First Union Muscles UpIn Brokerage with $1B Deal

Article excerpt

First Union Corp. said Monday that it plans to buy Everen Capital Corp. for $1.1 billion, a move that would bolster its already formidable presence in retail brokerage.

With the addition of the Chicago firm, First Union would expand its roster of licensed retail securities brokers by 42%, to 6,259. That would place the Charlotte, N.C., banking company sixth in the field, just behind PaineWebber Group Inc. and ahead of A.G. Edwards & Sons Inc. It now ranks 10th, according to the Securities Industry Association.

The stock transaction, which is slated to close in the third quarter, would also bring First Union's investment group into six mostly fastgrowing states: California, Wisconsin, Illinois, Texas, Ohio, and Colorado. In all, the business would span 41 states and would have three million customers, a 46% increase.

"We will have one of the largest, most experienced networks of brokers in some of the nation's most attractive markets," said Donald A. McMullen Jr., executive vice president and head of First Union's Capital Management Group.

The deal comes one month after First Union and Everen unveiled a joint venture that would combine the $70 billion of mutual fund assets they manage under a single roof.

Observers said the deal puts weight behind First Union's bid to compete in the lucrative business of selling securities to consumers. Since the early 1990s, chief executive officer Edward E. Crutchfield has made investment services a high priority and, piece by piece, he has assembled products and the sales forces to distribute them.

First Union's February 1998 acquisition of Wheat First was a productline expansion, said Catherine Murray, an analyst with J.P. Morgan & Co., New York, but "this is an addition of geography and customers."

"It pretty much gives them national distribution," said Burton J. Greenwald, a mutual fund analyst based in Philadelphia. …

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