A marriage may be in the offing between two of the top companies that market investment products through banks.
Well-placed sources say Liberty Financial Cos. is in serious discussions to buy a large piece of Wall Street Investor Services. The talks, according to the sources, are aimed at merging units that manage full-service brokerage programs for banks.
Such a deal would greatly increase Liberty's presence in the bank channel, doubling its client roster to 140 banks. The company would be in a league with such rivals as Essex Corp., GNA Corp., and Invest Financial Corp.
A spokesman for Boston-based Liberty said that as a matter of policy he could not comment on whether Liberty is holding discussions with Wall Street Investor. He added that no deal has been struck.
Wall Street Investor, based in New York, did not return repeated phone calls seeking comment.
However, Liberty's chief executive, Kenneth R. Leibler, has made no secret of the fact that he is on the prowl for acquisitions.
"They traditionally look at most of the properties that come on the market, and move forward seriously on some," said Christopher Spofford, an analyst with Putnam Lovell Thornton, an investment banking firm in New York.
In the past year, the company, a unit of Liberty Mutual Group, has acquired two juicy properties: Colonial Group, a Boston-based mutual fund company, and Newport Pacific Management, a San Francisco-based money manager.
An accord between Liberty and Wall Street Investor would continue a consolidation wave that has swept companies that help banks sell and manage investment products.
Other companies that have paired up in the past year include Essex Corp., an investment marketer that was bought by CUC International and Concord Holding Corp., a distribution and marketing firm that was bought by Bisys Group.
Sources said that Liberty is focusing its attention on Wall Street Investor's preferred investments division, which offers mutual funds through 70 banks. Wall Street Investor's current owners would retain a separate unit, which offers discount brokerage services through banks.
Such a deal "would allow Liberty to bring on a large group of banks at once, achieving volume and economies of scale," said Paul Werlin, executive vice president of the financial institutions division of Robert Thomas Securities, St. Petersburg, Fla.
And for Wall Street, the deal would provide a well-capitalized parent - a great asset at a time when investment marketing firms are scraping for every new client.
The days when it was easy for marketing companies to sign up banks are over, Mr. Werlin said. Most banks that are big enough to support an investment sales program already have one.
