Ferris, Baker Watts Inc., the conservative regional brokerage with Baltimore roots dating to 1900, closed yesterday its sale to a division of Royal Bank of Canada in an all-stock deal valued at more than $230 million.
The sale was approved by Ferris' employee shareholders in a meeting yesterday morning in Washington. The deal combines the firm's 300 brokers spread among 42 branch offices in eight states with the 4,000 brokers and financial advisers in the wealth management division of Canada's largest bank. The familiar Ferris, Baker Watts nameplate gracing area brokerage offices will eventually be replaced by RBC, whose Dain Rauscher Inc. money management subsidiary is based in Minneapolis.
Yesterday was the last day of work for about 10 percent of Ferris' 840 employees, whose jobs were eliminated at the close of business, according to John Taft, head of RBC Wealth Management's U.S. division. Most were in the firm's capital markets division or held duplicate positions with those at RBC. A second round of cuts might come after the two companies are integrated, but it's too soon to say how many will be affected, he said.
Despite the expected job losses, the outcome of the shareholder vote was never in doubt, given the favorable price being offered and the sizable holdings of George M. Ferris Jr., the firm's chairman, and other top executives. Ferris owned about a quarter of the firm's shares, giving him substantial say in the deal's success. His Ferris shares will be converted to RBC stock worth more than $50 million, according to regulatory filings.
The deal also will leave many long-time employees - from brokers to mail clerks - with a sizable gain in the value of their shares as the sole owners of privately-held Ferris. Some will see six- and seven-figure gains. The deal also establishes a $97 million pool of money to keep brokers from leaving during the transition.
"I think you will find that the shareholders at Ferris, Baker Watts are very pleased with the consideration they will receive," Taft said.
The sale comes after a year in which the firm dealt with the dual pressures of a declining market and costly regulatory inquiries into a stock manipulation scheme involving one of its former clients and his broker. For Baltimore, it means another home-grown financial institution will be absorbed by an out-of-state corporation.
