Raymond James scoops up 3Macs

Raymond James Financial Inc. agreed to acquire Canadian private-wealth manager MacDougall MacDougall & MacTier Inc., the latest in a series of takeovers by the U.S. financial services firm.

Raymond James’s purchase of the Montreal-based company, known as 3Macs, will create a Canadian investment dealer with more than $33 billion in assets under administration, the St. Petersburg, Fla.-based firm said Thursday in a statement that didn’t disclose terms. The transaction is valued at less than $100 million, according to a person familiar with the deal who asked not to be identified because the amount hasn’t been made public. The 3Macs shareholders will receive cash for their shares.

Raymond James chief executive Paul Reilly has been boosting the firm’s growth through acquisitions. Last year, he agreed to buy Deutsche Bank AG’s U.S. private-client services unit, as well as Canadian asset manager Cougar Global Investments Ltd. and Producers Choice LLC, a private insurance and annuity-marketing company. The deal allows Raymond James to expand into French-speaking Quebec.

“This is a great cultural fit, it’s almost a perfect strategic fit,” Paul Allison, CEO of Raymond James’s Canadian unit, said in a conference call with reporters. “Six of the seven locations are new locations for Raymond James, so it’s going to layer in very nicely without virtually any redundancies.”

The acquisition will add 72 advisers in Canada who oversee about $6 billion of client assets, the companies said.

MacDougall MacDougall & MacTier CEO Randy Ambrosie will remain after the purchase and report to Allison. Tim Price, chairman of 3Macs, will join Raymond James Ltd.’s board.

More importantly 51 of the 72 advisers are also portfolio managers. (In contrast, about 70 of RJ’s 371 advisers have such a designation.) Accordingly a higher portion of 3Macs revenue is fee-based — as opposed to transaction-based. “We can learn a lot from them,” joked Allison.

“It’s a good merger,” Ian Russell, CEO of the Investment Industry Association of Canada, said Thursday in an interview. “You’ve just created a very strong, independent firm that will add significant competitive pressures and choice into the market.”

3Macs’ roots go back to 1849, when Montreal broker Donald Lorn MacDougall and his brother established MacDougall Brothers, according to the money manager’s website. The firm merged with MacTier & Co. in 1960. The company will operate under the 3Macs brand as a division of Raymond James after the deal closes.

“The opportunity to continue our legacy at 3Macs was an important part of our decision to join Raymond James,” Ambrosie said in the statement, adding in the media call that the transaction gives 3Macs an opportunity to expand its service offerings.

Raymond James has operated in Canada since January 2001. of an ongoing government crackdown on habitual over-charging of the federal treasury, much of it largely a result of years of questionable defence procurement practices.

The key, auditors say, is to catch over-payments before work is concluded because after that “there is little incentive for a contractor to return funds.”

Officials have recouped about $6 million from companies during three years of work.