Alex. Brown enters its new era Venerable firm starts operating today as part of Bankers Trust

September 02, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

The huge gold revolving doors are spinning this morning at Alex. Brown Inc.'s headquarters building at 1 South St. in Baltimore, but today employees who walk through them report to a new boss -- Bankers Trust New York Corp.

Today ends more than 197 years of independence for the country's oldest investment banking firm. Today, Alex. Brown's name changes to BT Alex. Brown Inc., and the company's red and white flag, which adorned clipper ships carrying goods to and from England in the 1800s, is replaced by Bankers Trust's official logo, the pyramid.

Today, when the opening bell rings at the New York Stock Exchange, shares of Alex. Brown's stock will no longer be traded.

"This is a sad occasion but a joyous occasion," said A. B. "Buzzy" Krongard, former chairman and chief executive of Alex. Brown, who now is a director and vice chairman of Bankers Trust. "I look at this as a beginning and not an end."

Some business leaders see it the same way because the companies have said that the merger is a pure fit, meaning each side comes to the table with business products the other one doesn't have. As a result, few jobs will be lost when everything is in place.

"Alex. Brown is a great company, and that transaction will make for an even stronger Alex. Brown, which will be good for the employees and customers," said Donald J. Shepard, chairman of Aegon USA Inc., a Baltimore-based insurance company, which is owned by Aegon N.V., a large Dutch insurer.

Others agree, but they say Baltimore has lost part of its identity with the disappearance of Alex. Brown as an independent company. "It is sad to see the oldest name in investment banking in this country disappear," said H. Furlong Baldwin, chairman and chief executive of Mercantile Bankshares Corp., who heads one of the last large independent companies in the city. "In its entire, almost 200-year history, there has never been any scandal or black clouds associated with Alex. Brown. I think that is very unusual. This community will miss that name, will miss that reputation, and will miss the kinds of people who make that name and reputation."

Since 1987, Baltimore has lost local headquarters belonging to Monumental General Corp., MNC Financial Inc., Baltimore Bancorp., PHH Corp., UNC Inc., CSX Corp., Jiffy Lube International Inc., Merry-Go-Round Enterprises Inc. and Loyola Capital Corp.

It is a trend people should get used to, said Walter Sondheim, special adviser to the Greater Baltimore Committee, a Baltimore-based business group with interest in public policy.

"Nobody likes the fact that the management team will be reporting to New York rather than to their stockholders," he said. "None of us is happy to see it happen, but every city in the U.S. has got to get used to the fact that we are in a period of enormous purchasing and consolidation of companies."

Alex. Brown traces its roots to Alexander Brown, who came to Baltimore from Belfast, Ireland. He quickly involved himself and family members in deals that influenced not only Baltimore, but the country.

In 1808, he and other businessmen formed the Baltimore Water JTC Co., raising $250,000. The Brown family was instrumental in helping form the Baltimore and Ohio Railroad in 1827.

After the Civil War, the firm led the way in the rebuilding of the South by shipping goods to ruined cities. After Baltimore was destroyed by fire in 1904, the company played a crucial role in its reconstruction.

Brown weathered stock market crashes, thrived in its booms, and reached the milestone $1 billion in revenues in 1996.

Despite the firm's success, shareholders met in Baltimore on Aug. 13, 1997, and approved the merger with Bankers Trust, four months after the deal was announced.

The deal was seen as a good one for Brown stockholders, who exchanged their shares for 0.83 shares of Bankers Trust common stock, which on Friday worked out to $86.11 a share. Bankers Trust will also pay them a hefty $4 annual dividend -- more than five times what Brown paid a year.

The deal is valued at about $2.5 billion. Bankers Trust shares closed Friday at a record high of $103.75 a share. Brown's shares closed at $84.687.

On Friday -- the last as an independent company -- it was business as usual. Krongard was in the office at 6: 30 a.m, his normal starting time, preparing for meetings.

"No changes in my schedule," said Krongard, 60, who has worked for the firm for 27 years. "It is just a day, just like any other day. Everything is signed and sealed."

Some employees took the day harder.

"To see the flag disappear and to have their pyramid is just a difficult thing emotionally," said Tim Schweizer, who heads Brown's private client division and oversees more than 400 brokers.

"It is the only job I have ever had," said Schweizer, 53, who has worked for Brown for 28 years. "At 4: 01 p.m., I'm going to walk up and shake Buzzy's hand. I'm going to come in Tuesday morning extremely fired up, ready to make this work."

Although many employees took off Friday for the Labor Day holiday weekend, a room on the 17th floor where everything from Alex. Brown umbrellas to Polo shirts are sold was humming with business.

"I'm lucky I'm still standing," said Jane Bennett. "It has been absolutely crazy."

Bennett was fielding requests in person and over the phone for $80 briefcases with the company logo; 25 Alex. Brown polo shirts and red and black North Face jackets for $55.

Krongard said he actually feels better about the deal with Bankers Trust now than when he first signed it.

"I feel darn good about it," he said. "Let's get on with it."

Pub Date: 9/02/97

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