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City National Agrees to Buy Convergent Capital

February 01, 2003|E. Scott Reckard | Times Staff Writer

In a deal that will nearly double its wealth management business, Beverly Hills-based City National Corp. said Friday that it has agreed to buy Convergent Capital Management Inc., a privately held Chicago company with interests in 10 money management firms.

City National is the parent of City National Bank, sometimes known as the "bank to the stars" for its Hollywood roots. It will pay about $41.5 million in cash for Convergent Capital and assume $7.5 million in debt, the companies said.

City National Chairman Russell Goldsmith said the acquisition is expected to be neutral to earnings in the first year and add to them in subsequent years.

City National previously has said it wanted to acquire firms that handle investments for wealthy people and institutions. Six of Convergent Capital's firms focus on individuals and four serve primarily institutions. The firms include Clifford Associates and Philip V. Swan Associates in Pasadena, as well as others in San Francisco, Hawaii, Texas, Illinois and Michigan.

Convergent Capital has $6.5 billion in assets under management, and City National has $7.4 billion.

Investors applauded the deal, which broadens City National's client mix and geographic reach.

City National shares rose 71 cents to $45.82 in New York Stock Exchange trading.

Convergent Capital will continue to be operated from Chicago, with its chief executive, Richard H. Adler, reporting to Vernon Kozlen, a City National executive vice president and director of asset management development.

One of City National's core businesses is providing financial services to people with more than $1 million to invest, many of them in the entertainment industry.

Goldsmith said the model for the latest deal was City National's November 2000 acquisition of Reed, Conner & Birdwell, an L.A.-based money manager for wealthy Californians and pension funds in the Midwest.

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