Jersey City wholesaler Hill, Thompson, Magid & Co. is being acquired by Boston-based Freedom Securities for approximately $45 million in cash and stock.
In an unrelated move, two of Hill, Thompson's most senior managers, Anthony Broy, and Nicholas Ponzio, assume new executive posts at the firm, which will operate as an autonomous affiliate of Freedom Securities. Broy, currently president, has been named chief executive. Ponzio will step into the post of president.
Hill, Thompson, which was formed in 1932, makes markets in over 8,000 Nasdaq Small Cap, OTC Bulletin Board, Pink Sheet stocks and OTC ADRs.
Freedom Securities owns a chain of small broker dealers that include two municipal bond houses, Hopper Soliday and Gibraltar Securities. The firm also owns San Francisco broker, Sutro & Co. as well Tucker Anthony Cleary Gull in Boston.
The Attraction
Freedom Securities Chief Executive John Goldsmith said his firm is buying Hill, Thompson in part because of its solid record the last 10 years.
Freedom Securities was also attracted by Hill, Thompson's niche as a dealer in small thinly-traded securities.
"Hill trades the bottom half of the list [of OTC stocks]," Goldsmith said. "These stocks will always need a market maker to provide liquidity. Larger stocks are increasingly traded electronically."
Freedom considered buying an exchange specialist, but decided against it, said Goldsmith. The company is an investor in a small New York Stock Exchange specialist joint account' with Robb Peck McCooey Specialist Corporation and R. Adrian & Co.
Although Hill, Thompson will operate as an autonomous unit of Freedom Securities, some synergies are expected. "We can provide greater institutional depth and market-making capacity that will benefit other Freedom operating companies," Ponzio said. Some of Hill, Thompson's back office functions will be handled by Freedom Securities.
Goldsmith says Freedom Securities' investment bankers might do business with the companies Hill, Thompson trades. Freedom Securities' institutional sales people might market Hill, Thompson securities to their clients, he added.
More Plans
There are also plans to allow Hill, Thomson clients to trade with the dealer over the Internet. Executives at both firms did not provide specific details.
Ponzio will continue to run Hill's trading desk, but will also explore new business ventures, including ways to work with other Freedom Securities units.
Both Broy and Ponzio joined Hill, Thompson in 1990.
