John Hancock to Sell Two Brokerage Units
John Hancock Mutual Life Insurance Co. said Friday that it has agreed to sell its Sutro & Co. and Tucker Anthony Inc. stock-brokerage units to a group led by the firms’ managers for $180 million.
Sutro, headquartered in San Francisco, and Boston-based Tucker Anthony are respected but small, regional competitors in the securities industry, and Hancock said it’s shedding the firms to focus on its core insurance lines.
As a result, Hancock joins a list of companies that tried and failed over the past decade to build prosperous “one-stop” financial-services empires that included brokerage firms.
Like American Express Co., Kemper Corp. and Sears, Roebuck & Co. before it, Boston-based Hancock gobbled up brokerage operations in the 1980s to build a diversified stable of firms that could rapidly increase the financial services it sold to consumers.
But like the others, Hancock later concluded that its brokerage group, at least, failed to live up to expectations. The idea failed in good part because consumers proved reluctant to having all of their financial transactions handled under one roof.
Technically, Hancock is selling its Freedom Securities subsidiary, which includes Sutro, Tucker Anthony and a Boston asset-management firm named Freedom Capital Management. Industry sources told The Times last month that the deal was in the works and the sale is now expected to be completed by the end of the year.
Freedom’s chairman, John Goldsmith, said “we were profitable, they were a wonderful parent and left us alone, but there was never much synergy” between the brokerages and Hancock.
“I never was a believer in the financial supermarket” idea, Goldsmith said in a telephone interview. “I believe financial services are something like doctors--people want to go to specialists.”
Now, Sutro and Tucker Anthony will more aggressively vie for business and try to enhance their profits, but they will not stray widely from their traditional strengths in securities brokerage and investment banking, he said.
“We think there’s a place in this world for good, strong regional firms,” he said.
As expected, Freedom’s management is being joined in the purchase by two investor groups, Thomas H. Lee Co. of Boston, and SCP Private Equity Partners, a fund sponsored by Safeguard Scientifics Inc. of Wayne, Pa. Hancock plans to retain an ownership stake in Freedom of about 5%, Goldsmith said.
Sutro and Tucker Anthony have combined capital of about $110 million, which does not place them even among the nation’s 50 largest securities firms. Their combined assets under management total a modest $4.4 billion.
