70.9 F
Los Angeles
Friday, Oct 7, 2022

Depression-Era Stock Brokerage Smiles at Merger

Downtown L.A. stock brokerage Crowell Weedon & Co. was founded during the Great Depression – and its age was showing.

While other brokerages branched out into investment banking, bond underwriting and other services, Crowell Weedon remained an old-fashioned firm focused exclusively on retail investors, making it difficult for the firm to compete in an increasingly fierce market.

Last week, partners at the firm voted to merge into Davidson Cos. of Great Falls, Mont., a brokerage that offers a broader range of services. The deal is expected to close by the middle of the year.

Bryant Riley, chairman of West L.A. brokerage and investment bank B. Riley & Co., said competition has pushed commissions down and forced firms to cut costs, find other revenue sources or merge. Just last year, B. Riley acquired San Diego brokerage Caris & Co.

“There’s power in being bigger,” Riley said. “You can eliminate overhead and get closer to the revenue. I think that’s happened to a lot of firms out there. There’s been a need to consolidate.”

Davidson has more than 1,100 employees and $34.5 billion in assets under management, compared with Crowell Weedon’s 340 employees and $9 billion in assets managed.

Davidson offers investment banking and bond underwriting services. Edward Wedbush, founder of longtime Crowell Weedon competitor Wedbush Inc., said the merger makes sense.

“Crowell Weedon’s only area was in private client services,” said Wedbush, whose firm provides brokerage services as well as investment banking, commercial banking and stock clearing. “You’ve got to be in all of these other areas. If you’re not ready to do those things, the competitive environment is going to drive you into mergers.”

Andrew Crowell, Crowell Weedon’s managing partner and grandson of firm co-founder Warren Crowell, said his company has never had the capability to get into other lines of business, such as underwriting municipal bonds. That will change with the Davidson merger.

“That’s just one example of the kind of new capabilities Crowell Weedon advisers will have access to,” he said.

Crowell Weedon partners voted April 30 to be acquired by Davidson. Shareholders will exchange some of their equity for Davidson shares. Further financial details of the transaction were not disclosed.

After the deal closes, Crowell Weedon will be a Davidson subsidiary, but it will keep its name; L.A. headquarters, at One Wilshire; and leadership. Crowell will stay on as president, reporting to Jim Kerr, president of Davidson.

The deal gives Davidson, a major brokerage in the Pacific Northwest, a big presence in California. It will pick up Crowell Weedon’s 147 financial advisers and 14 branches, most of them in the L.A. area. Davidson now has just three California offices: Pasadena, Costa Mesa and San Francisco.

“This was a real easy fit for our company,” Kerr said. “There’s no overlap. We’re adding clients in a totally distinct market.”

Package Profit

Beverly Hills private equity firm Platinum Equity likely reaped a big gain last week when it finalized the sale of European packaging company Contego Healthcare.

It sold the company, which makes blister-pack labels and other packaging for pharmaceuticals, to British firm Filtrona PLC for about $249 million. That’s on top of the $113 million Platinum got last year when it sold a related company, food packaging maker Contego Cartons, to Atlanta firm Graphic Packaging Holding Co.

Platinum bought both companies in 2011 from South African packaging manufacturer Nampak Ltd. for just $103 million – less than one-third of the companies’ combined sale price.

It’s not clear how much Platinum invested in the companies, though it reported building two new Contego Healthcare factories and investing in new package printing and folding technology at several manufacturing sites in Europe.

Platinum officials declined to comment beyond a press release. “We created substantial value and have positioned the company for continued success under new ownership,” Bryan Kelln, Platinum’s president of portfolio operations said in the release.

C-Suite News

Soo Bong Min has been named chief executive of BBCN Bank, subsidiary of Koreatown bank holding company BBCN Bancorp Inc. Min was president and chief executive of BBCN competitor Wilshire Bancorp Inc. from 1999 until 2007.

Staff reporter James Rufus Koren can be reached at jrkoren@labusinessjournal.com or (323) 549-5225, ext. 225.


Featured Articles


Related Articles