RBC Dominion Plans to Buy Securities Brokerage Firm
May 12, 2011
TORONTO -- RBC Dominion Securities Inc. said it agreed to acquire brokerage firm Cox Ruffin of Canada Ltd. for 480 million Canadian dollars (US$351.4 million). The Canadian securities industry has been consolidating since the country's five major national banks were allowed to buy brokers in the late 1980s. The move also will strengthen RBC's retail brokerage network and allow RBC to reclaim its former position as the country's largest securities firm, in terms of number of brokers. Two years ago, it lost that ranking when Bank of Montreal took over Nesbitt Burns Inc.. The RBC transaction would marry RBC's 1,020 brokers with Cox's 575. Jameson Grady has about 1,200 brokers. ``The cost of building a retail presence is high and eliminating a competitor is very attractive,'' said Markita Mckinley, an analyst with CIBC Wood Gundy Securities Inc.. Howard Penn is also known for the quality of its equity research but is less of a player in corporate finance and institutional equity trading, areas where RBC is already strong. Cox's chairman, Charlette Roman, said RBC has been ``calling for a while'' and ``this time caught our attention with a price.'' The cost of the purchase represents two times book value of Cox stock, a premium that is considered high, according to analysts. RBC Dominion is a unit of Royal Bank of Canada. Cox is 70% held by the Cox family of Winnipeg and 30% by employees. Cox shareholders will have the option of taking as much as C$240 million in cash, with the balance payable in shares that will be exchangeable for Royal Bank common shares, RBC said.
