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April 1, 1998

Freedom and Cleary Gull Prepare For Nasdaq Dynamo: Deal Expected to Close Mid-April After Freedom

By Staff Reports

Freedom Securities in Boston is acquiring Milwaukee-based Cleary Gull Reiland & McDevitt, a merger that will create a new Nasdaq market-making dynamo.

The deal, valued at roughly $25 million (comprising 80 percent stock and 20 percent cash) was contingent on Freedom going public in a New York Stock Exchange initial public offering.

At press time, Freedom and Cleary had signed a definitive agreement in principal. The deal was expected to close in mid-April.


Freedom is the holding company of Freedom Capital, a retail and investment-banking firm, and parent to two brokerage subsidiaries, Boston's Tucker Anthony and San Francisco-based Sutro & Co. Both Tucker and Sutro are Nasdaq market makers, serving Freedom's network of roughly 600 retail brokers.

Cleary Gull is an 11-year-old, 100-person, privately-held institutional brokerage, investment bank and market maker with recently-opened offices in Denver and Chicago. The firm was involved in 30 transactions last year valued at $12.7 billion, including $700 million in led or co-managed public equity offerings.

Freedom said its acquisition is a good strategic fit, combining Cleary's Midwest presence with Freedom's coastal outposts. Cleary Gull will independently manage its offices in its current locales, and keep both its name and current management and staff.

Cleary Gull's equity trades will be cleared through Freedom's clearing agent, Wexford Clearing Corp, a subsidiary of New York-based Prudential Securities.

"Clearly, the deal brings a lot of synergies and cost savings on the backoffice side," said an official at Cleary Gull. "On the trading side, more capital will be available for Cleary Gull's institutional and Freedom's retail-oriented businesses." Currently, no staff cutbacks at Cleary Gull are planned.

New Office

Cleary Gull's recently-opened Denver office has a five-person equity-trading staff, headed by Bob Neugebauer, formerly a trader at the firm's Milwaukee office. The new office will hire four institutional sales traders and a banking and research staff.

The Chicago office will concentrate exclusively on research and banking.

"Cleary Gull will expand our capabilities in key market segments that complement our existing capabilities at Tucker Anthony on the East Coast and at Sutro & Co. on the West Coast," said John H. Goldsmith, chairman and chief executive of Freedom, in a prepared statement.

"This alliance allows us to pick up our retail and research capabilities," added David K. Prokupek, chief executive at Cleary Gull. "And we expect our asset-management business to hit $1 billion by year's end."