Quick & Reilly Group Inc. is soliciting bids that investment bankers say may value the nation’s third-largest discount brokerage at $1.3 billion, or 16 times its annual earnings.
The Palm Beach-based firm with more than 1,000 employees gave about a dozen potential buyers the chance to submit preliminary bids by Monday, sources said.
The brokerage’s stock Monday rose $2.68, to $29.31, following a Bloomberg News report that the company could be sold.
Trading totaled 278,000 shares, more than double the three-month daily average during the past three months.
Thomas Quick, the president and chief operating officer, declined to comment. His family owns about 40 percent of Quick & Reilly, according to a spokesman.
First Union Corp. and Barnett Banks Inc., two of the largest Southeastern commercial banks with goals to expand in the securities business, are among the likely bidders, investment bankers said. Both banks could use Quick & Reilly to help sell mutual funds.
First Union and Barnett declined to comment.
The planned sale would follow several merger agreements between banking and securities firms this year, including the $1.7 billion purchase of Alex.
Brown Inc. by Bankers Trust New York Corp.–as regulators chip away at 60-year-old laws separating commercial and investment banking.
“I’d be incredibly surprised if someone wasn’t taking a good hard look at them,” said Michael Sears, an analyst at Lehman Brothers Inc., because of Quick & Reilly’s lower stock price relative to that of other securities firms.
Quick & Reilly’s stock is trading at 14 times annual earnings. That’s far less than the 29 times earnings for rival discount broker Charles Schwab Corp. and also less than the 15 of Merrill Lynch & Co.
Quick & Reilly would be a “great” entree into the brokerage industry through subsidiaries that include U.S. Clearing Corp. and JJC Specialist Corp., said Lehman’s Sears.
Quick & Reilly has been recognized as one of the nation’s three largest discount securities brokers since the mid-1970s, along with rivals Charles Schwab and Fidelity Brokerage Services. Quick & Reilly has increased the emphasis on its specialist-brokerage and securities-clearing businesses.
