CHICAGO - Moving to bring its U.S. business mix more in line with that of its Dutch parent, ABN Amro North America Inc. said Wednesday that it had agreed to acquire the Chicago Corp. for $135 million in cash, or 1.5 times book value.
With Chicago Corp.'s investment banking capabilities and domestic depository activities, the unit can "become the 'universal bank' that ABN Amro is in Holland and Europe," said North America chairman and chief executive Harrison F. Tempest.
The Chicago-based securities firm, which has $500 million of assets and $43.2 million in net capital, will place ABN Amro among the top 50 U.S. broker-dealers. Total regulatory capital will be $200 million.
The move will also help the Amsterdam-based banking giant, with $346 billion of assets and $53 billion in the United States, to round out its brokerage business here. While ABN Amro is focused mostly on fixed-income securities, Chicago Corp. is strong in the equity markets, particularly in futures and options trading.
"The premier name of Chicago Corp. gives us another step," said Mr. Tempest, who runs ABN Amro North America from Chicago.
Chicago Corp. chairman John A. "Jack" Wing will be in charge of the merged securities and investment units, also based in Chicago.
The deal, which is expected to close in the second quarter and is subject to regulatory approvals in the United States and the Netherlands, got high marks from analysts. They said that the price is right and that they liked the way Chicago Corp. would broaden ABN Amro in securities trading.
Mr. Long said that Mr. Wing has been the key to the firm's success and that it was smart to keep him in charge.
Mr. Long also said the deal would enhance ABN Amro's stature in global markets.
Few foreign banks have made such bold moves in the United States. Following this path, Deutsche Bank, the biggest German bank, acquired C.J. Lawrence Inc., an American securities firm, in 1989.
"There has been a great interest on the part of foreign banks to increase their market share in this country," Mr. Long said. "You will never be a global player unless you have a good presence in the U.S. There is no other way to make that happen."
Mr. Tempest and Mr. Wing said their deal was weeks in the making.
Mr. Wing said the issue was not whether to sell, but when. He said he realized the firm had "gone about as far as we can go" and needed a strong partner. He was willing to wait a year or two, he said, but ABN Amro was "far and away the right opportunity."
There will be no job losses, according to both executives, and Mr. Wing said he expects to expand Chicago Corp. staff over the next several years.
Mr. Tempest said the deal would not affect ABN Amro's earnings. He foresees no charge against income as a result of the acquisition.
ABN Amro, the third-largest foreign bank in terms of U.S. assets and parent of the LaSalle banking group in the Chicago area, has had its sights on expansion in the Midwest. While it is absorbing Chicago Corp., Mr. Tempest said the company will be "out of the hunt" for other Chicago-area banks.