Merrill, the biggest US securities firm, will pay 0.24 shares for each Midland Walwyn share, valued at C$31.89, a 17 per cent premium to the company's Friday closing price.
The purchase marks the return of Merrill to Canada's retail brokerage business after an eight-year absence as the New York firm and its rivals use acquisitions to expand around the globe. Midland Walwyn has 116 branches and 3,240 employees, including 1,275 salespeople.
"All the securities firms are seeing unprecedented global opportunities,'' said Phil Carter, an analyst who helps manage $7bn for Phoenix Investment Counsel, which owned 275,600 Merrill shares in March. Buying Midland Walwyn is "a nice little niche in a broader global strategy,'' he said.
Merrill sold its Canadian retail unit in 1990 to CIBC Wood Gundy Securities, a Canadian investment bank. Now, the firm is taking advantage of its stock being near a record high and the rising US dollar to become one of Canada's three largest brokerages. In the past three years, Merrill has acquired Smith New Court to become the UK's biggest brokerage firm, and Mercury Asset Management, one of the world's largest money managers.
Midland Walwyn shares rose C$2.40 to $29.65, after gaining 19 per cent since last Monday on speculation that the firm would be purchased. It has been the focus of takeover speculation since Royal Bank of Canada's RBC Dominion Securities bought Richardson Greenshields of Canada in 1996.Reuse content