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Bear Stearns' special buy
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February 15, 2001: 3:53 p.m. ET
Deal for No. 5 NYSE specialist Wagner Stott increases consolidation in field
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NEW YORK (CNNfn) - Broker and investment banker Bear Stearns Companies is buying Wagner Stott Mercator LLC, one of the leading specialist firms on the New York Stock Exchange.
The deal is just the latest in a spate of consolidation in the field that has great importance for trading most of the nation's largest capitalized stocks. Specialists are member of the NYSE who, by pairing orders, maintain a market in particular stocks.
Privately held Wagner Stott Mercator was already the fifth-largest specialist. Bear Hunter Specialists, the joint venture between Bear Stearns and privately held Hunter Partners LLC, which will be acquiring Wagner Stott Mercator, was ranked seventh at the beginning of this year in terms of stocks handled.
 The combined entity, to be known as Wagner Stott Bear Specialists, will be the third-largest specialist in terms of NYSE trades based on both dollar value, in which it will handle 18 percent, and share volume in which it will handle 16 percent. It will rank fourth in terms of issues handled, as it makes the market for 359 stocks, including four of the 30 stocks in the Dow Jones industrial average, 73 of the S&P 500 index and 40 of the 250 most active issues on the NYSE.
Wagner Stott Mercator will get $625 million in the deal, consisting of cash and membership interests in Wagner Stott Bear. After the deal closes Bear Stearns will own 49.8 percent of the combined entity, while Hunter Partners will own 50.2 percent, including the ownership interests of former Wagner Stott members.
Field has seen rapid consolidation
The specialist business has seen rapid consolidation moves by some of financial service's biggest names in the last year. On Jan. 29 competitor Goldman Sachs Group Inc. (GS: Research, Estimates), which had already acquired the No. 2 specialist firm Spear, Leads & Kellogg in September 2000, announced it was buying Benjamin Jacobson & Sons, another leading specialist.
In October LaBranche & Co., which was already the largest specialist firm, bought Robb Peck McCooey Financial Services. And FleetBoston Financial (FBF: Research, Estimates), which bought the specialist business of Merrill Lynch & Co. (ML: Research, Estimates) in 1998, bought M.J. Meehan & Co. last year to create the specialist with the largest number of issue listings.
The spate of consolidation will leave the five largest specialist firms with 92 percent of the NYSE trades in terms of dollar value, nearly 90 percent of the trading volume on the exchange and 77 percent of the number of stock listings, according to Bear Stearns. There will only be 10 other specialist firms.
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"We believe that bolstering our position as a top NYSE specialist is a vital extension of Bear Stearns' strategy of being a leading provider of liquidity, execution and clearing services," said a statement from James E. Cayne, CEO of Bear Stearns. The company said the deal should add to Bear Stearns' earnings per share immediately, although it did not give details.
Shares of Bear Stearns (BSC: Research, Estimates) gained $1.47 to $59.45 in afternoon trading Thursday, although that was off the high of the day of $60. 
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