Wells Fargo Seeks More Hedge Fund Clients With Merlin Securities Deal
In yet another move that reinforces Wells Fargo’s (NYSE:WFC) strategy of making the most of the global slowdown by expanding through acquisitions, the country’s largest bank by market capitalization recently announced the acquisition of Merlin Securities. [1] The new business will allow Wells Fargo to provide prime brokerage services to its clients – an invaluable addition to its growing investment banking operations. In a bid to diversify its service offerings, the bank announced the acquisitions of Burdale Financial Holdings Limited and EverKey Global Partners in the recent months (see Wells Fargo’s on a Shopping Spree, Picks up Burdale from Bank of Ireland). The ongoing acquisition spree makes it a more formidable competitor to the likes of Bank of America (NYSE:BAC), Citigroup (NYSE:C) and JPMorgan Chase (NYSE:JPM).
We maintain a $35 price estimate for Wells Fargo’s stock, which is about 5% above the current market price.
See our complete analysis of Wells Fargo here
Merlin Securities’ offerings are largely focused on hedge funds, serving around 500 clients with about $2 billion in assets. These clients will be added to Wells Fargo’s Securities business once the acquisition process is complete next quarter.
The acquisition will have some notable impact on Wells Fargo’s securities business in the near future. The most direct advantage will be the addition of $2 billion in assets to the division’s asset base. Once the integration is complete, Wells Fargo will be able to offer technology-based prime brokerage services to its existing customers, boosting its presence among investment banking stalwarts. Also, the acquisition provides opportunities to cross-sell existing products and services to Merlin’s clients.
Submit a Post at Trefis Powered by Data and Interactive Charts| Understand What Drives a Stock at Trefis
Notes:- Wells Fargo to Acquire Merlin Securities, LLC, Wells Fargo Press Releases, Apr 27 2012 [↩]