NEW YORK -- Sears, Roebuck & Co., the nation's largest retailer, will acquire Dean Witter Reynolds Organization Inc., Wall Street's fifth largestbrokerage house, for more than $600 million, under an agreement approved Thursday by directors of both companies.
The takeover bid was the latest in Sear's aggressive drive into the financial services business and was the third merger offer this year for a giant brokerage house by conglomerates trying to develop 'one-stop' financial service centers for consumers.
Under terms of the agreement, Sears will pay $607 million in cash and stock to merge Dean Witter into an autonomous subsidiary.
Sears said it would begin its offer to pay $50 cash for up to 45 percent of Dean Witter's 12.14 million shares by Oct. 15. Following Dean Witter shareholder approval, Sears said it would acquire the rest of the shares through a tax-free exchange of Sears stock valued at $50 a share.
In announcing the merger agreement, Sears Chairman Edward R. Telling said 'we can together achieve our goal of becoming the premier provider of consumer financial services. The trust that the public places in these two great names and institutions will bring a new dimension of service to the 36 million families who are regular Sears customers.'
For Sears, the Dean Witter takeover bid reflects its aggressive and sweeping thrust into the financial services and real estate sector.
On Monday, Sears announced an agreement to buy Coldwell, Banker & Co., the nation's largest real estate brokerage company, for about $179 million. Last month, Sears disclosed plans to seek approval to establish a money-market fund.
The Chicago-based Sears, with 854 retail stores nationwide, already owns the Allstate Insurance Co. and operates a huge credit card operation. Through its Seraco division formed in 1980, Sears operates the Allstate Savings and Loan of California as well as mortgage banking, mortgage insurance, and other real estate activites.
Dean Witter Chairman Andrew Melton Jr. said 'with total capital of approximately $15 biillion, Sears provides the broad capital base which is essential for major financial services companies. The Sears name, and all it stands for, represents a worldwide consumer franchise and source of potential new investment services business superior to any financially oriented company with which we might entertain a relationship.'
The acquistion of Dean Witter would represent another major step toward what industry analysts see as evolving into 'one-stop' shopping for financial and investment services. Under one roof, a customer would be able to find an array of financial services to meet his needs for insurance, credit cards, real estate, loans, money market funds and stocks and bonds.
Earlier this year, two major Wall Street brokerage houses were acquired by large companies looking to diversify their financial services business. Prudential Insurance Co. of America, the nation's largest insurer, acquired Bache Halsey Stuart Shields Inc., the No. 6-ranked securities firm, for $385 million; and American Express, the nation's biggest credit card concern, acquired No. 2-ranked Shearson, Loeb Rhoades Inc., for almost $900 million.
Dean Witter, based in San Francisco, operates 330 offices nationwide and overseas, employing nearly 4,500 brokers handling some one million customer accounts.
Dean Witter stock rose more than 9 points early this week before trading was halted Wednesday morning at Dean Witter's request pending the outcome of its board meeting. On Tuesday, Dean Witter shares closed at $35.25, up $5.875.
Although the stock has surged numerous times in recent months on persistant takeover speculation surrounding the brokerage firm, the New York Stock Exchange said it was reviewing recent trading activity in Dean Witter stock apparently to determine if the latest jump in share prices was due to traders illegally using inside information about the takeover bid