AmEx to Buy All Shearson Stock in $350-Million Deal : Securities: In announcing the stock swap decision, the company indicated that it is abandoning efforts to sell the brokerage in which it already holds 61%.

American Express Co. announced Sunday that it would buy all the outstanding common stock of its Shearson Lehman Hutton Inc. subsidiary that it doesn’t already own, adding that it had ended discussions with other Wall Street securities houses to sell its troubled retail stock brokerage.

The move culminates months of effort by American Express, which already owns 61% of Shearson, to shore up the finances of the nation’s second-largest retail brokerage. And it indicates that the giant travel and financial services company, which has owned Shearson since 1981, has abandoned hopes--at least for the time being--of reducing its exposure to the troubled securities industry by selling the brokerage.

In a deal valued at $350 million, American Express said it would exchange 0.426 of its own shares for each Shearson share. On Friday, American Express stock closed at $29.375, while Shearson stock was valued at $12.50. American Express said Sunday that the 13 million shares of Shearson preferred stock owned by Nippon Life Insurance Co. would remain outstanding. The holdings give Nippon a voting state of about 13% in Shearson.

“These actions affirm American Express’s long-term commitment to Shearson Lehman Hutton and its customers, and to working with its management team,” James D. Robinson III, chairman and chief executive of American Express, said in a prepared statement.

Shearson has been among the brokerages hardest hit by the turmoil and uncertainty that has plagued the securities industry since the crash in October, 1987. Although the stock market has risen since the crash--hitting its all-time high earlier this year and shrugging off a sharp downturn in Japan in recent weeks-Wall Street firms have been in a prolonged slump for nearly the past 2 1/2 years.

Last month, Drexel Burnham Lambert Group, parent company of what was once the most profitable firm on Wall Street, filed for Chapter 11 bankruptcy and began selling off its businesses. And most other brokerage firms, including No. 1-ranked Merrill Lynch & Co., have been cutting staff since the 1987 crash. In all, the brokerage industry has lost 34,000 jobs since the crash.

Last week, Shearson said it would cut 2,000 employees from its 45,500 staff and shed its far-flung operations in an effort to save $400 million annually. American Express also disclosed that it had held “very preliminary” discussions about combining its Shearson operations with those of rival Smith Barney, Harris Upham & Co.

At the time, analysts said American Express had been trying to find a buyer for Shearson since last summer and had approached several U.S. and foreign concerns about buying all or part of the giant stock retailer. Among those rumored to have rejected proposals are Nomura Securities, a Japanese brokerage, and Salomon Bros.

The possible deal with Smith Barney was viewed as having great potential, in large part because the company’s parent, Primerica, is headed by Sanford I. Weill, the scrappy Wall Streetwheeler-dealer who had sold what was then Shearson Loeb Rhoades to American Express in 1981 for $930 million.

American Express did not detail why the talks with Smith Barney broke down.

American Express first moved to strengthen its grip on Shearson last month by ousting Chairman and Chief Executive Peter A. Cohen, the man who guided the firm’s rapid growth in the 1980’s to become the nation’s No.2 brokerage, in part through the acquisition of E.F Hutton Group just weeks after the 1987 crash.

Cohen was replaced by Howard Clark Jr., American Express’ chief financial officer.

As a result of a review led by Clark, “We are confident that Shearson Lehman can be returned to levels of profitability that will maintain its position as a premier company in the securities industry,” Robinson said Sunday. “Shearson Lehman Hutton is an important and integral part of the American Express family, and we are pleased to provide it with support.”

In the same statement, Clark said, “This vote of confidence from American Express gives us the support we will need to implement the findings of our strategic review and achieve successful performance levels as a leader in the securities industry.”

Last week, American Express said it was dropping a plan to reduce its 61% stake in Shearson through a public stock offering and instead would increase its ownership by injecting $750 million into the brokerage. Late last year, American Express injected $250 million into Shearson. That brings the total amount that American Express has invested in Shearson in recent months to well over $1 billion.