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Merrill May Sell Its Canadian Brokerage

November 08, 2001|Reuters

Merrill Lynch (MER) is looking to sell its Canadian brokerage unit as part of a global retrenchment, just three years after it snapped up the business, a person familiar with the matter said Wednesday.

New York-based Merrill is overhauling its various businesses under new President Stan O'Neal, who is pressuring managers to hit profit goals despite the sharp market slump. Merrill has eliminated more than 6,000 jobs this year as it cuts costs and reassesses international operations. "Merrill pointed out pretty clearly ... that international [brokerage operations were] something they were looking at very hard for costs savings," said analyst Reilly Tierney of Fox-Pitt, Kelton Inc., an investment bank specializing in financial services.

A sale is one of the options Merrill is considering for its Merrill Lynch Canada Private Client Group, which includes Midland Walwyn Inc., an independent brokerage that Merrill bought for more than $800 million in 1998.

Merrill declined to comment but is rumored to be looking for $300million to $500 million for the business, industry bankers said. The most frequently rumored buyer is Robert Schultz, the former head of Midland Walwyn, who is said to be putting together a group of investors to buy the operation, bankers said. Schultz could not be reached for comment. TD Securities, part of TD Bank, and British bank HSBC Holdings are other possible buyers, bankers said.

Merrill is in the midst of talks with a mix of Canadian and U.S. firms for the business, which employs about 2,300 people, a source familiar with the matter said. A Canadian bank might be a logical buyer, or a U.S. financial services firm, analysts said.

The financial services industry is suffering from a combination of a weak economy, a falling stock market and the uncertainty created by the Sept. 11 terrorist attacks. It's been raining pink slips on Wall Street, and it's anybody's guess when business will turn around.

Merrill stock fell 28 cents to $49.

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