Shares of Interra Financial Inc., parent of Dain Bosworth Inc., rose 4.7% Tuesday on speculation the brokerage might be the next to be sold to a commercial bank.
Interra shares rose $2.75, to $61.375, after a report in TheStreet.com, an on-line news service, that a sale of the Minneapolis-based firm could take place soon. The news service named Banc One Corp. as the most likely buyer.
"It's the rumor du jour," said Katrina Blecher, analyst at Gruntal & Co. "Interra is an attractive company with good management that has shown it can enhance shareholder value on its own, but in today's marketplace, with prices like they've been, anybody would be tempted to sell."
Banc One officials declined to comment. Shares of the Columbus, Ohio, banking company closed down 12.5 cents, to $57.5625.
In addition to Dain Bosworth, Interra is also parent of Rauscher Pierce Refsnes Inc., a brokerage based in Dallas.
Together, the two brokerages offer a strong retail business, with about 1,200 brokers. Their underwriting business is comparatively small, however. Dain Bosworth has led $203 million worth of stock and bond offerings this year, ranking it 75th among all brokerages and investment banks, according to Securities Data Co.
Gruntal's Ms. Blecher added that the firms "lack asset management," a service for which such banking companies as Fleet Financial Group and J.P. Morgan & Co. have paid healthy sums lately.
Interra trades at 2.5 times its book value. If it were to sell for 3.0 times book-less than the 3.35 regional brokerage Wheat First Butcher Singer received when it agreed sell itself to First Union Corp. in August-then Interra would cost a buyer $73.77 per share, or about $907 million.
Banc One greatly expanded its nontraditional banking business when it bought credit card specialist First USA Inc. in June for $7.9 billion. Its share price has since lagged the market.