A. Brown stock up 28% over two days Firm remains silent on talk of merger with Bankers Trust

April 05, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

Alex. Brown Inc.'s shares soared yesterday for the second day in a row on speculation that the company is in merger negotiations with Bankers Trust New York Corp.

Shares of the Baltimore-based brokerage and investment banking firm jumped $8.50 yesterday -- 19 percent -- to close at $53.125.

On Thursday, Alex. Brown's shares rose $3.25. That's a 28 percent increase in two days.

"I've rarely seen a stock go up by this amount and [have] the rumor fall through," said George M. Salem, an analyst with Gerard Klauer Mattison, a New York investment banking firm.

An Alex. Brown spokeswoman declined to comment and referred phone calls to the company's chairman and chief executive, A. B. "Buzzy" Krongard. She said Krongard and Mayo A. Shattuck III, the company's president and chief operating officer, are in Florida for a meeting they hold each year with top brokers from the firm.

A spokesman for Bankers Trust, the country's seventh-largest banking company with $120 billion in assets, also declined to comment.

Salem sees a solid fit between Alex. Brown and Bankers Trust. He said Bankers Trust would relish landing Alex. Brown, which is a leading company in bringing high technology and health care companies public.

"Alex. Brown has exactly what Bankers Trust needs," Salem said.

"Alex. Brown is probably the most sought-after company of that nature. But most of the companies that have that strength are too big to acquire, or too small to matter. Alex. Brown is bite-sized."

Others disagree with Salem's views, saying the rumor holds little validity.

"This would be a surprise," said David S. Berry, research director with Keefe Bruyette & Woods Inc., a New York-based brokerage firm. "But I have already been so surprised by two or three things that I have seen this year, you've got to think anything is possible."

Berry said he believes Alex. Brown has rejected many suitors.

"Alex. Brown has been the subject of rumors for a year, and I believe a lot of folks have talked to them and have been told to leave," he said.

Michael Flanagan, an analyst with Financial Services Analytics Inc. in Fort Washington, Pa., said he has little reason to believe an offer has been made.

"Alex. Brown is quite an independent firm," Flanagan said. "There would certainly be potential for culture clashes. Quite frankly, Alex. Brown doesn't fit in the mold of a commercial bank."

Rumors have been swirling about Alex. Brown's future for years, but they have picked up steam in the last several months.

In January 1995, it was rumored that London-based National Westminster PLC was in discussion to merge with Alex. Brown. Another rumor at the time was that Deutsche Bank AG was interested in the firm.

Speculation about Alex. Brown surged again in February after news that Morgan Stanley Group Inc. and Dean Witter, Discover & Co. were merging to create the country's largest asset management company.

One rumor circulating shortly after the Morgan Stanley and Dean Witter announcement had officials with New York-based Bear Stearns Cos., the nation's sixth largest securities firm, in Baltimore meeting with either Alex. Brown or Legg Mason Inc.

Krongard has consistently remained silent when questioned about these matters.

Pub Date: 4/05/97

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