Shares of PaineWebber Inc. rose in a down market Friday as investors speculated that the company, which had just announced an acquisition, would itself be bought soon.

PaineWebber said that it would purchase privately owned J.C. Bradford & Co. of Nashville for $620 million. The deal would add 900 brokers and $46 billion of assets. It also renewed rumors about a PaineWebber takeover.

PaineWebber's shares rose 59.375 cents, or 1.38%, to $43.65625, on a day when most financial stocks were down.

The speculation was fueled by a Wall Street Journal report on the PaineWebber-Bradford deal that said officials at the New York investment firm seemed less than adamant about staying independent.

Market speculation on Friday shifted to the possibility that banks would consider buying PaineWebber in order to get Bradford's business.

"I would be surprised if Chase had not looked at them," said Michael A. Flanagan, an analyst at Financial Service Analytics.

Chase Manhattan bought Hambrecht & Quist Group last year, and J.C. Bradford's strong retail distribution would have complemented Hambrecht, Mr. Flanagan said. Chase has not been able to buy a large-scale brokerage operation, and Bradford was one of the largest independent firms left, he said.

Diana Yates of A.G. Edwards was dubious about Chase's interest but said she thought Wells Fargo & Co. and First Union Corp. could have looked at J.C. Bradford.

"Chase has been looking for New Economy deals," Ms. Yates said. "A more traditional banking organization would have made a better fit."

PaineWebber was widely rumored as a takeover candidate two years ago, when several brokerage firms were bought by banks:

  • BankBoston Corp, a forerunner to FleetBoston Financial Corp, bought Robertson Stephens & Co., the investment arm of BankAmerica Corp.
  • Keycorp bought McDonald & Co. Investments, a Cleveland securities firm.
  • PNC Bank Corp. bought the closely held brokerage and asset manager Hilliard-Lyons Inc., Louisville, Ky.
  • hovia Securities Inc. bought Interstate/Johnson Lane Inc. of Charlotte, N.C., in a deal that closed in April 1999.

In February 1998, shares of PaineWebber surged 17% in one day on speculation that it would be bought. Potential acquirers were thought to be Chase Manhattan Corp. and J.P. Morgan. Its shares rose again in August 1998 on similar speculation, but that time the talk was that Dresdner Bank was interested.Still, there are some who believe that PaineWebber is likely to stay independent for a while.
Mr. Flanagan said some people believe that Bradford executives sold out because those observers expect a "double dip," but he is not among them. In a double dip, owners profit once when their company is bought and again when the acquirer is bought.

"I don't think that factored into their thinking," Mr. Flanagan said. "It is not in the best interest of the firm, and it is extremely difficult and nettlesome to transfer support systems."

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