Hambrecht & Quist Appears to Be Near Sale
Investment bank Hambrecht & Quist Inc. may soon follow the footsteps of competitors Robertson, Stephens & Co. and Montgomery Securities, sold to commercial banks this year, investment bankers and analysts said Sunday.
Likely suitors include several big U.S. banks, including BankBoston Corp., U.S. Bancorp and Mellon Bank Corp., analysts said. Market sources also said international banks such as Societe Generale of France have shown an interest in San Francisco-based H&Q.;
Analysts cited rumors last month that Societe Generale had offered $45 per share for H&Q;, which specializes in initial public offerings for hi-tech firms.
A spokeswoman for H&Q; declined to comment. The French bank as a policy does not comment.
The stock of H&Q; rose more than $10 from its closing price of $29 on Wednesday to close at $39.25 on Friday, indicating to industry watchers that the firm is near a sale.
“There’s no doubt that discussions are going on,” said Lloyd Greif, president of L.A.-based investment banking firm Greif & Co. “The only surprise is it didn’t happen sooner.” Takeover speculation has intensified with each sale of a competitor, like San Francisco-based Robertson Stephens, which was sold to BankAmerica Corp., and Montgomery Securities, which was acquired by NationsBank Corp.
Greif said it looked as if H&Q;’s shares were approaching a likely sales price in the mid-$40 range, or four to five times book value, which is what investment banks are selling for.
He estimates that H&Q;, which had about 26 million shares outstanding as of Sept. 30, could fetch nearly $1 billion in a sale.
“It looks and smells like a deal,” said George Salem, analyst with Gerard Klauer Mattison, adding, “It’s very attractive, and there’s a lot of banks, both domestic and foreign, who need any equity-oriented investment bank.”
But another analyst noted that the stock’s activity may be serving as a decoy for the true securities firm that will be acquired.
For instance, shares of PaineWebber shot up on heavy takeover speculation around the time that Dean Witter was bought by Morgan Stanley, and Bankers Trust surged on rumors of a purchase by Travelers, which subsequently bought Salomon Bros.
Hambrecht & Quist Chief Executive Officer Daniel Case has kept no secret of the fact that he prefers to keep H&Q;, which went public a year ago, as an independent entity.
H&Q; is the 17th-largest underwriter of common stock and initial public offerings through the first nine months of 1997, according to Securities Data Co.
One H&Q; employee, speaking on condition of anonymity, said Friday that every time a member of the company’s upper management gets on a plane, the hallways are abuzz with speculation that a deal is in the works.
Case, who took the helm in 1992 at age 34, owns a 9% stake in the company. It was worth about $36 million when H&Q; went public last year, analysts said.
Some analysts observed that H&Q;’s stock was climbing back to levels it once achieved before Smith Barney Inc. analyst Dean Eberling slapped a “sell” rating on it on June 27. Eberling said the stock was bloated by takeover speculation.
