Meridian Bancorp said Thursday it would acquire McGlinn Capital Management Inc., a privately held investment firm, for 500,000 warrants on Meridian common stock, and an undisclosed amount of cash.

Analysts said the deal is worth at least $14.5 million - if the warrants, which are similar to options to buy common stock, were valued at Meridian's current price per share of $29.

Meridian's stock closed up 37.5 cents to $29.375 on Thursday.

McGlinn, based in Reading, Pa., has $2.8 billion in assets under direct management.

McGlinn will become a wholly owned subsidiary of $14.3 billion-asset Meridian. Terrence J. McGlinn, 53, the founder, president, and chief executive of McGlinn Capital, will continue as president and chief executive.

The move "furthers our strategy to expand our fee-based business, and it significantly increases our assets under direct management," said Samuel A. McCullough, Meridian's chairman and chief executive officer.

McGlinn's addition will increase Meridian's assets under direct management by 46% to $8.8 billion. Meridian has total trust assets of $25 billion.

Currently 32% of Meridian's total revenues are derived from fee-based services. "We want to get it up to the 45% range in the near future," said David E. Sparks, vice chairman and chief financial officer of Meridian.

3% Boost to Earnings per Share

The acquisition will immediately accrete 3% to Meridian's 1993 earnings per share, Mr. McCullough said. Analysts estimate Meridian's 1993 earnings per share at $2.80.

"This is not a cost-saving opportunity; it is a revenue opportunity," Mr. McCullough said.

This acquisition, like Mellon Bank's recent agreement to acquire Dreyfus, will expand Meridian's fee-based services. But "this is not a Mellon-Dreyfus deal," Mr. McCullough insisted. Unlike the Mellon-Dreyfus transaction, Meridian's purchase of McGlinn would not dilute earnings. He said that Meridian views McGlinn as a successful stand alone company.

Mr. Starks said that Meridian is purchasing McGlinn for six times the price/earnings multiple of McGlinn's current earnings, but he declined to give McGlinn's earnings.

Meridian said it wants McGlinn to keep its own investment strategy. Mr. McGlinn characterized his company as a balanced manager with about 60% assets in equities and 40% in bonds. Meridian's style is a mixture of growth and value investments, Mr. McCullough said.

Top Managers to Remain

McGlinn's top managers will keep their current positions, and the entire staff of 30 people will be retained, according to Meridian.

The deal is expected to be completed by the first quarter of 1994, subject to regulatory approval. At that time, the warrants will be priced at market value on either the date of closing or signing of the deal.

Mr. McGlinn said his company would get the benefit of Meridian's research capabilities.

An analyst who requested anonymity estimated McGlinn's annual revenues at $15 million, based on its investment mix.

Time Frame for Warrants

McGlinn will have 10 years to exercise the Meridian warrants. At that time, Mr. McGlinn will sign a five-year employment contract with Meridian that can be extended if both parties agree.

There are no plans to change McGlinn's name at present, Meridian officials said.

"McGlinn has a good track record," said Denis Laplante, a securities analyst with Fox-Pitt Kelton. "This is a people business. As long as they can keep the principals there, the operation will do well."

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