Schwab Acquiring SoundView

November 19, 2003 ( - Charles Schwab Corp. plans to acquire securities firm SoundView Technology Group Inc.

The Old Greenwich, Connecticut-based SoundView acquisition will allow Schwab Capital Markets LP to provide institutional clients with equity research and client-focused trade execution capabilities, Schwab said in a news release.    The combined organization will be named Schwab SoundView Capital Markets.

SoundView Chief Executive Mark Loehr and Larry Leibowitz, Schwab Capital Markets’ executive vice president for equities, will jointly manage the combined entity.

“Institutions, like individual investors, are demanding high-quality and independent research, particularly as many traditional brokerage firms have cut back or restructured their offerings in the wake of the research-related controversies in recent years,” Schwab Chief Executive David Pottruck said in the release.

Keeping with the theme of independent research, Soundview also announced it exit from the investment-banking industry.   This was facilitated with a “memorandum of understanding” between Soundview and the chairman of SoundView’s Dawntreader Fund II Bob Lessin.   Per the agreement, Lessin will acquire ownership control of the investment adviser and the general partner of the fund and increase his capital commitment to the funds by assuming a portion of SoundView’s remaining capital commitment to the funds, according to a Dow Jones report.

The $324 million all cash-deal is expected to close in the first quarter of 2004, subject to regulatory approvals.   Approved by the board of directors for both company, Schwab said it does not expect any impact on 2004 earnings as a result of the acquisition, which the company projects will be slight accretive in 2005 earnings.   This is due to the synergies Schwab anticipates that will result from the combination of the two firms, including heightened trading volume, cross-selling opportunities and increased scale.