NEW YORK (CNNfn) - A unit of Fleet Financial Group said Monday it had agreed to acquire Merrill Lynch's specialist trading operation.
The ideal will vault the unit into second place among firms that help keep stock markets liquid by standing in as buyers and sellers of blue chips when others may not be interested.
Under terms of the acquisition, Boston-based Fleet's JJC Specialist reportedly will pay $150 million for Merrill Lynch Specialists Inc., effectively ending Merrill's presence in a specialist stock arena that the firm never considered vital to its operations.
JJC Specialist is part of Quick & Reilly, a discount brokerage firm acquired by Fleet for $1.6 billion in February that specializes in more than 270 issues for 216 companies, including blue-chip giants such as General Electric Company.
By contrast, the Merrill Lynch unit handles stock trading of 148 issues in a portfolio of 117 companies that include behemoths like Coca-Cola Co. and Chase Manhattan Corp.
Fleet's acquisition of the Merrill unit will catapult JJC back into second place in the niche stock-trading segment, behind LaBranche & Co., which plans to buy Wagner Stott Mercatur LLC.
After the integration of Merrill Lynch Specialist, JJC will handle a market in 426 securities for 333 NYSE-listed firms. The portfolio will include 70 S&P 500 companies and four that figure in the bellwether Dow Jones industrial average.
Gunnar S. Overstrom , the vice chairman of Fleet Financial growth, said the buyout of the Merrill unit underscores his company's "commitment to growth in the investment services area."
Specialist firms like JJC help supply stock market liquidity by stepping in as purchasers and sellers of equities -- often big blue-chip issues -- when outsiders exhibit little or no interest. The firms typically charge a nominal fee of around a fraction of a penny for each share traded.
"By bringing on the specialists from Merrill Lynch, and expanding the corporate relations staff that serves our NYSE-related companies, we are further strengthening our reputation on the floor and with the listed companies we represent," said Christopher Quick, president of JJC Specialist.
Quick & Reilly Services, a wholly-owned subsidiary of Fleet Financial, is a diversified financial services company with $99.5 billion in assets and more than $74 billion in investment assets under management.
While Merrill's specialty unit has been profitable, analysts say the company has been looking to shed it in order to further cut costs at a time when global turmoil has eaten into the company's bottom line.
Last month, Merrill Lynch took a third-quarter charge to cover the cost of 3,400 layoffs, part of a broader swathe of job cuts across the financial sector.
Shares of Merrill Lynch (MER) closed down ¾ at 63 Friday, while Fleet (FLT) stock ended 1/16 higher at 42-1/8.