Canada's last big independent broker may soon be gone
April 26, 1999 07:00 PM
By Scott Anderson
TORONTO, April 26 (Reuters) - Canada's last big independent brokerage, First Marathon Inc. (CA:FMSa), has been the subject of intense takeover speculation, with rumors of as many as three interested suitors.
First Marathon's shares punched through their 52-week high of C$25.25 in intraday trading on Monday, climbing to C$25.90 on rumors the company may be the target of a takeover bid.
The stock closed at C$23.60, up C$0.60.
Speculation in recent weeks has mounted that a number of financial services companies, including Toronto-Dominion Bank C(A:TD TD), CT Financial Services Inc. (CA:CFS) and Merrill Lynch & Co. (MER), were eyeing the Toronto-based brokerage.
First Marathon shares rose C$3.05, or 15 percent, last week. Their 52-week low is C$16.75.
"I've got a strong sense something is going on," said one Toronto-based fund manager. "The timing of it, I don't know, but I strongly believe something is going on."
A spokesman at First Marathon refused to comment.
"It's just not our policy to comment on that type of thing," Michael Walsh, senior vice-president at First Marathon, told Reuters on Friday
Toronto-Dominion and CT Financial also refused to comment on the speculation.
If the closely-held First Marathon is scooped up, it continues the trend of public brokerage houses being purchased by the larger companies. Over the past few years, other such takeovers included Dominion Securities' purchase of rival Richardson Greenshields and Merrill Lynch and Co.'s purchase of Midland Walwyn Inc.
Most of Canada's big brokerages are now owned by the country's banks.
Industry insiders say the most likely suitor for First Marathon would be CT Financial, parent company of Canada Trust. Many say CT could be interested in the brokerage to bulk up its securities group.
CT Financial has a cache of funds and is on the hunt after its attempts to purchase British Columbia-based Surrey Metro Savings Credit Union in a C$131-million deal were rejected by the credit union's members in February.
Under the Dominion Securities-Richardson Greenshields and Merrill Lynch-Midland Walwyn deals, the companies went for approximately three times book value. First Marathon would likely have to go for about C$45 a share for the deal to be considered fair, analysts said.
"I think, if it's the right fit, it probably makes sense for First Marathon," said Irwin Michael, a fund manager at ABC Funds, whose funds hold approximately 3-3/4 percent of the company.
"It's the last public investment brokerage house. They've got a good market niche and a very strong corporate finance department. So for the right people, it probably does make sense, but it would have to be at a very fair price."
($1=$1.47 Canadian) |
