THE Greig Middleton stockbroking business is set to be greatly expanded following the agreed takeover of its King & Shaxson parent by Gerrard & National.
Increasing competition has forced the two former discount houses to come together. Their traditional business has declined because of the Bank of England's ability to control the economy other than through the money markets and much of their existing capital is tied up in taking positions in gilts for very low returns.
Gerrard, whose subsidiaries include the Gerrard Vivian Gray broking house, has made an offer which values King at #53.9m. But if the deferred shares are included, the value rises to #86.9m.
These shares belong to the vendors of Greig Middleton which was acquired by King in 1994 and of Allied Provincial which it bought in July last year for #16.4m.
It is planned to transfer all the back office activities of Gerrard Vivian Gray such as settlement to Greig's office in Glasgow and that there will be annual savings of #3m before any one-off rationalisation costs.
Putting the two stockbroking businesses together will create a group with over 20 offices spread throughout the UK. Greig has around #7.5bn under management and GVG some #2.3bn. Greig employs 800 people altogether, 320 in Glasgow and 45 spread between Edinburgh and Dundee.
GVG presently has some 250 employees but it is possible that between 80 and 100 redundancies will occur, split between stockbroking and the bill discounting activities. Greig's back office of 125 people in Glasgow should therefore see some increase in numbers in time.
As part of the inevitable management shake-up, Bernard Solomons, the former chairman of Allied Provincial and chairman of the Scottish Stock Exchange is not only standing down from King but has decided to leave stockbroking after nearly 30 years.
He said that at 52 he was seeking a few fresh challenges which could include a number of non-executive directorships. At the Parsons broking firm he set in motion the process which led to the development of Allied Provincial a decade ago as he could see the direction the whole industry as going with the increasing use of information technology and rationalisation and he wanted Parsons to be in the middle of it.
Mr Solomons added that following the merger Greig Middleton had become a national force and other broking firms are having to sit up and take notice. The overall annual cost savings are estimated at #5m.
Gerrard's current chief executive becomes non-executive chairman and Ian Perkins, Mark Kemp-Gee, Norman Andrews and Mark Sherriff will become executive directors. The terms of the deal are 17 Gerrard shares for every 25 King shares.
Market reaction was to mark Gerrard shares down 24p to 275p while King rose 20p to 182!sp. Gerrard's interim profits almost halved to #6.3m because of very quiet conditions on the foreign exchanges and demand for derivatives at its GNI subsidiary which operates on the Liffe financial futures market.
n.In a historic vote, members of the Australian Stock Exchange (ASX) have approved a plan to clear the way for the ASX to be the first publicly-listed Stock Exchange in the world.
At special meetings held simultaneously in all of Australia's capital cities, members approved the proposal which will allow the ASX to dismantle its mutual structure and seek Federal legislation to allow it to become a public company.
Speaking after the meeting ASX chairman Maurice Newman said keen interest had been shown in the move from the Paris and Toronto Stock Exchanges which had asked to be informed promptly about the results of the meeting.
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