Rumors of merger drive up Alex. Brown Inc. shares Latest speculation has brokerage merging with Bankers Trust

April 04, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

Shares of Alex. Brown Inc.'s stock jumped 7.9 percent yesterday on speculation that it is in merger talks with Bankers Trust New York Corp., the nation's seventh largest banking company.

The Baltimore-based brokerage and investment banking firm's stock ended the day up $3.25 a share to close at $44.625. Wednesday the stock closed at $41.375 a share, a low for the year.

A. B. "Buzzy" Krongard, Alex. Brown's chairman and chief executive, and Mayo A. Shattuck III, president and chief operating officer, were said to be traveling and could not be reached for comment.

Bankers Trust spokesman Tom Parisi said, "Our comment is that we don't comment on market rumors, as a matter of corporate policy."

Alex. Brown's shares rose after CNBC reported that the companies could be in merger talks.

Industry analysts said they had no knowledge of a deal.

"I would imagine culturally the two institutions are extremely different," said Lawrence R. Vitale, a banking analyst with Bear, Stearns Cos. "But this could happen tomorrow morning, for all we know."

Cheryl Swaim, an analyst with Oppenheimer & Co., said such a deal wouldn't surprise her.

"Commercial banks are interested in the equity business and Alex. Brown certainly has an attractive franchise in that business," she said. "Clearly, it [Bankers Trust] is more of an investment bank than most of the commercial banks. Clearly, it would be interested in an area like this."

Alex. Brown is a regional brokerage house with a national reputation for taking health care and high technology companies public. It reported record revenues of $1 billion last year.

Bankers Trust has $120 billion in assets and operations in 50 countries. It isn't a typical retail bank with branches; rather, it specializes in financing huge corporations.

It's also involved in investment banking and operates a subsidiary that trades securities.

Alex. Brown has been rumored to be an acquisition target for nearly two years, even though company officials are adamant about retaining their independence.

Speculation surged in February when Morgan Stanley Group Inc. and Dean Witter, Discover & Co. agreed to merge and create the country's largest asset management company, with a market capitalization of $23 billion and $270 billion in assets under management.

Pub Date: 4/04/97

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