Royal Bank of Canada's agreement to buy Minneapolis-based Dain Rauscher Corp. is its biggest step forward yet in assembling a U.S. network of financial services one business line at a time, largely through acquisitions.

The $1.46 billion acquisition would greatly broaden the U.S. distribution and investment banking business for Royal Bank, the largest Canadian banking company in assets, at a time when global competitors are clamoring to add to their operations here. Dain Rauscher, to be renamed RBC Dain Rauscher Wessels, is the nation’s 14th-largest securities firm in terms of brokers, boasting 1,200 “private client and institutional investment executives.”

Throughout the year Royal Bank has scooped up financial services operations that have expanded its capabilities in the United States on the product and distribution levels. In March it bought Chicago-based Prism Financial Corp., which sells mortgages, brokerage services and loans, for $115 million. In June it announced that it would buy Liberty Life Insurance Co. and Liberty Insurance Services Corp. in Greenville, S.C., for $650 million in cash and up to $70 million of dividends. That deal is to close by yearend.

Dain Rauscher, a regional brokerage with business primarily in the western United States, is to be rolled into Royal Bank’s RBC Dominion Securities to create a North American franchise with 2,600 investment advisers and a network of 215 branch offices. Both securities firms would function under the new RBC Dain Rauscher Wessels name, and the companies said no layoffs are expected.

Irving Weiser, president, chairman and chief executive of Dain Rauscher Corp. is to be chairman and CEO of the new combined brokerage. He would also run Royal Bank’s wealth management business in the United States, Dain Rauscher’s fixed-income business, and all staff functions.

Though added size and scope were obvious attractions for Royal Bank, another was that the deal itself was of manageable size, executives said. It also combines elements of two far larger acquisition agreements by Swiss banking groups this year — the Credit Suisse First Boston-Donaldson Lufkin & Jenrette and UBS AG-PaineWebber Group Inc. deals.

Royal Bank, for now at least, appears to want to use its focus, rather than size, as a selling point. “We’re very confident that this will provide us an opportunity to provide a very focused position in the marketplace behind the larger, bulge-bracket firms,” John Cleghorn, chairman and chief executive officer, told analysts in a conference call.

The acquisition will also give Royal Bank’s “corporate and investment banking business a stronger origination and distribution capability, particularly in the technology, energy, and health-care sectors,” he added.

Royal Bank agreed to pay $95 for each share of Dain Rauscher stock. Dain closed Wednesday at $79.875, a fairly substantial 18.9% below the offer price.

The deal is latest in a series of sweeping consolidation moves to come in the financial services industry in recent weeks.

Earlier this month Dresdner Bank AG agreed to buy the merger advisory firm of Wasserstein, Perella & Co. for $1.56 billion. Also this month, J.P. Morgan & Co. agreed to be bought by Chase Manhattan Corp. for $33 billion.

Mr. Weiser said Royal Bank was not the only company to pitch a buyout offer for Dain.

“We’d like to think that we’ve been approached by just about everybody out there, and that’s one of the sort of things you want when you have the strong performances we’ve had,” he said. The Royal Bank-Dain combination was the best fit, he explained. He declined to say what other companies expressed interest.

For Royal Bank, focusing on a regional broker like Dain Rauscher instead of a firm the size of Lehman Brothers made more sense, said Mr. Cleghorn. Purchasing Dain Rauscher is more of a “bite-size, manageable, and affordable” deal than going after a much larger firm, he said.

Royal Bank said it does not expect to take any merger-related charges in connection with the acquisition. The deal, which would require regulatory and shareholder approval, is expected to close by the end of the year, the companies said.

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