NEW YORK (CNNfn) - NationsBank Corp. announced Monday it has agreed to acquire San Francisco-based investment boutique Montgomery Securities for $1.2 billion in cash and stock.
For NationsBank, which has spent years successfully building its fixed-income businesses -- such as underwriting, sales and trading -- the Montgomery acquisition becomes the cornerstone of its equity business, which traditionally garners higher fees.
"Montgomery's proven capabilities and expertise, particularly in equity distribution, and its unique franchise in the growth sectors of the economy, are a critical part of our overall vision," said Edward Brown, president of NationsBank Global Finance.
The transaction is the latest in a string of combinations as commercial banks race to team up with investment banks in the wake of rapid deregulation of Depression-era banking laws.
On April 6, Bankers Trust New York Corp. said it planned to pay $1.7 billion for Alex. Brown Inc. On May 15, the SBC Warburg securities unit of Swiss Bank Corp. announced a $600-million purchase of Dillon Read & Co. And, Montgomery's San Francisco neighbor, Robertson Stephens & Co., will be acquired by BankAmerica Corp. for $540 million.
In a joint statement, the companies said on Monday NationsBank will finance 70 percent of the acquisition using cash and 30 percent with stock. Montgomery will become part of NationsBanc Capital Markets Inc., which will be renamed NationsBanc Montgomery Securities Inc.
Montgomery's chief executive Thomas Weisel will become chairman of the new subsidiary. The transaction, which is subject to regulatory approvals, is expected to close in the fourth quarter of 1997.