has been acquired by
Financial advisor to Robertson Stephens
Bank Boston acquired Robertson Stephens & Company
August 30, 1998 (New York, NY) - Freeman & Co is pleased to announce that is as successfully advised Robertson Stephens & Co on its merge with Bank Boston, the second largest bank in New England.
"We think it's a merger made in heaven," said Allan Bortel, president of Inverness Management, a Mill Valley, Calif.-based investment firm with $15 million under management. The acquisition should boost BankBoston's earnings because it can win more business and higher fees by providing a wider array of services, he said.
"The addition of Robertson Stephens' equity origination, distribution and research capabilities to our existing investment banking and capital markets business allows us to offer a full range of investment banking services to all of our corporate customers worldwide," said BankBoston Chairman and Chief Executive Chad Gifford.
BankBoston estimated the cost of the purchase at $550 million after taxes on a present-value basis.
BankBoston Chief Operating Officer Henrique de Campos Meirelles said the purchase would reduce earnings in 1998 by 43 cents. He said sales at Robertson Stephens would climb to $400 million in 1998 and $480 million in 1999, up from $250 million in 1997. Meirelles said the purchase would add to BankBoston's earnings per share in less than three years.
For BankBoston, the price is "considerably more favorable than it might seem at first, because of the duration of payments to Robertson Stephens employees and the fact that the vast majority of the payments will be related to performance," said Lehman Brothers analyst Diane Glossman.
"We're buying a business that's grown. BankAmerica put a lot of money into it," BankBoston Chief Financial Officer Susannah Swihart said. BankBoston's purchase price is about 14 1/2 times Robertson Stephen's projected earnings, in line with the prices paid for other brokerages, Swihart said.
Prices of securities firms rose in the past year as mergers swept the industry and as financial markets surged, boosting Wall Street's profits. Investment banking revenue at Robertson Stephens, whose clients include computer maker Sun Microsystems Inc., jumped almost 50 percent since last year to an annual rate of about $400 million. BankAmerica put its investment bank up for sale last month after agreeing to merge with Charlotte, N.C.-based NationsBank Corp., whose securities unit, NationsBanc Montgomery Securities, competes with Robertson Stephens.
The companies said most of Robertson Stephens' employees will stay with the 20-year-old firm, which will remain in San Francisco. It will be renamed BancBoston Robertson Stephens Inc.
Michael McCaffery, president and chief executive, will continue to run the company. The retention payments will be made to 156 Robertson Stephens partners and key employees, said a person familiar with the plan. BankBoston shares fell 81.25 cents to $105.375. BankAmerica fell $1.0625 to $82.6875.