In the wake of Travelers Corp.'s deal to buy Salomon Inc., investors zeroed in on Lehman Brothers Inc. as the brokerage firm most likely to be bought-but steered clear of the other major brokerages.

Lehman's shares rose 3.8% while other major brokerages' shares held steady or fell as the market continued to react to Wednesday's news that Salomon had agreed to a $9 billion sale to Travelers.

"Clearly, Lehman Brothers has been touted as the No. 1 takeover candidate, basically because it is believed not to be as profitable as the other companies," said bank analyst Richard X. Bove of Raymond James & Associates, St. Petersburg, Fla. "The scuttlebutt in the market is that the company is weak and that it is going to be sold."

But while Lehman continued to rise, PaineWebber Inc.'s stock rose only slightly, and Donaldson, Lufkin Jenrette Securities Corp., Merrill Lynch & Co., and Bear, Stearns & Co. slipped. Some blamed the price of the Salomon deal for throwing cold water on merger speculation.

The 10% premium to market price that Travelers will pay appears paltry next to the 25% that has often been paid in bank mergers.

Indeed, analyst Raphael Soifer of Brown Brothers Harriman & Co. advised investors to take their profits from the Salomon sale and plow the money in the shares of major banks.

Mr. Soifer downgraded Salomon to short-term "avoid" from short-term "hold."

Traveler's is acquiring Salomon Brothers in a stock swap in which 1.13 shares of Travelers will be exchanged for one share of Salomon Brothers stock, or $78 a share. Salomon shares surged to a new 52-week high of $76.50 on Wednesday.

Mr. Soifer said the slim gap between the current price and the merger price signals the market is certain that the deal will go through. He added that his downgrade is not a reflection on Travelers.

"We just think that investors should take profits," said Mr. Soifer. "We do not cover the insurance industry so we can't give an opinion."

Mr. Soifer said that investors should opt for Merrill Lynch, but not because it is a viable takeout target.

"Merrill is too large to be taken out realistically," he said. "It has also always been a buyer of firms and in the period of consolidation will continue to do so."

"Everybody wants to be like Merrill," said Mr. Soifer. "Merrill Lynch is the Michael (Jordan) of the industry. Why would you want to be like Mike when you can be Mike."

Other market sources said the Salomon deal showed that the merger speculation about brokerages has gotten out of hand.

"The stocks are decidedly mixed because overall levels of the brokerage firm index are overinflated," said Michael W. Clark, managing director, head of U.S. equity trading at Credit Suisse First Boston. "And people are acknowledging that brokerage shares are inflated and that firms are paying tip-top prices to get this run-and-gun industry."

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