Just two weeks after cutting a $1.6 billion deal with Fleet Financial Group to sell its operations, Palm Beach, Fla.-based Quick & Reilly Group is intent on conducting business as usual.
And that's just what Boston-based Fleet wants, said Thomas C. Quick, president of Quick & Reilly's holding company. "As far as they're concerned, they want us to continue to do what we've done."
The deal, set to close in early 1998, would make Fleet the parent of the third-largest discount brokerage in the United States, as well as snare the bank a Nasdaq marketing operation and equity clearing house. Fleet would also become the only bank to operate a New York Stock Exchange specialist or equity market-making unit.
At present prices, the combination would have a market capitalization of roughly $17.8 billion. Fleet brings roughly $16.36 billion of that to the table.
Thus business as usual for Quick & Reilly now comes with the considerable clout of Fleet behind it, giving the firm access to 1,200 Fleet branches from Maine to New Jersey and to the bank's Galaxy Fund group and the investment products of Columbia Management Corp., Portland, Ore., which Fleet is in the process of acquiring.
Meanwhile, Quick & Reilly is continuing to develop its similarly named discount brokerage business and its clearing operation, U.S. Clearing. The firm is in discussions to buy a one-shop discount brokerage operation in the Northeast and is looking at some new strategies for the clearing business, said Mr. Quick. He declined, however, to be more specific about either project.
Fleet has encouraged Quick & Reilly's acquisitive strategy, said Mr. Quick. "They have acknowledged: 'We're bankers; we don't know your business.' That's why they wanted us to sign five-year contracts," he said.
That aggressive tack saw the firm acquire Nash Weiss & Co., an over-the- counter Nasdaq market maker, earlier this year and has helped the firm grow its New York Stock Exchange specialist outfit, JJC Specialist Corp., to the second largest on the exchange floor.
Mr. Quick noted that Big Board chairman Richard Grasso "was extremely pleased" on hearing the news of Quick & Reilly's plans for new ownership from Chris Quick, head of JJC, and Eugene McQuade, vice chairman and chief financial officer at Fleet.
Mr. Grasso indicated that Fleet stepping up to the plate to provide increased capitalization would be a bonus for his efforts to get foreign companies to list on the NYSE, said Mr. Quick. "Not that we weren't well- capitalized," he hastened to add.
Financial strength is not crucial when acting as a broker, noted Thomas F. Theurkauf Jr., an equity analyst at Keefe Bruyette & Woods Inc. "But as it relates to trading and market making, it's all for the better," he added.
"Clearly, Fleet's sheer size and capital structure behind them will just add stability to the specialist operation," added Katrina Blecher, an equity analyst at Gruntal & Co. However, the clearing operation-which inevitably ties in with the equity market-making business-will likely benefit more, said Ms. Blecher.
"The firm you clear for uses your balance sheet, and clearly the better the balance sheet the more attractive it will be for somebody to clear through Quick & Reilly," she said.
Meanwhile, Quick & Reilly will continue its planned rollout of the firm's beefed-up no-transaction fee fund supermarket in early 1998, but in a more expanded way.
"This is something which can be put in all their bank branches as well as the Quick & Reilly branches-making it available to over seven million people," Mr. Quick said.
The firm offers 295 no-load funds from 17 families, but plans to double that number by enhancing technology. But, whether the Columbia and Galaxy funds would be added to that mart has yet to be decided. Quick & Reilly, meanwhile, would be able to benefit from Fleet's municipal bond operation in the Northeast, he noted.
Quick & Reilly would also put discount brokerage operations under the same roof as Fleet in locations where the firm does not have a presence, he said. "For example we've no branch offices in Vermont, New Hampshire, and Maine." The firm has 116 branches nationwide.
The brokerage would also be taking on Fleet's discount brokerage and clearing operations as well as oversight of the 275 investment advisers in Fleet's branches in the Northeast, said Mr. Quick.
"They will be reporting to us," he said, adding that he expects overlap to be "nominal."
While there were other suitors for Quick & Reilly, Mr. Quick would not say who they were. He declined to confirm whether Banc One Corp., Royal Bank of Canada, or NationsBank Corp. were contenders.
NationsBank is rumored to have pulled out of the bidding after it brokered a deal for Barnett Banks Inc. However, Mr. Quick did note that an insurer and diversified financial services firm both had their hats in the ring alongside the banking industry.
And, on rumors that the chairman and father Leslie Quick Jr. decided to sell the firm to avoid succession issues among his sons after he retires, Mr. Quick noted: "That I would say was the fluff attached to the deal trying to make the situation a little more exciting for outsiders to read."
The senior Mr. Quick had, however, instituted a two-year revolving presidency several years ago to give all his sons a chance at the job. Thomas Quick is close to completing his stint. His role will be up for discussion "in several months," he said.
