The price of the deal is estimated between $300 million and $340 million, according to a Reuters story.
"This acquisition fits strategically with Fidelity and should benefit the correspondent clearing clients of both companies," Fidelity Vice Chairman and COO Robert L. Reynolds said in a statement. The deal brings an additional 150 clients to Fidelity, Joseph J. Grano Jr., chairman and CEO of UBS PaineWebber, said in a statement.
UBS PaineWebber, a unit of Swiss financial services firm UBS AG, sold the clearing unit from its wealth management branch, in order to concentrate on its core business of managing money for the rich, Reuters reports. The report says the sale would be a break-even for UBS after taxes of approximately $120 million, the amortization of goodwill associated with CSC (estimated at around $190 million) and transaction fees.
As to why UBS would sell its clearing unit, Grano said: "Increasingly, this business requires scale."
Ellyn A. McColgan, president of Fidelity Brokerage Co., said Fidelity is purchasing UBS unit because of its sound reputation as a clearing business in both the retail and institutional markets. "Adding the talent and business book that CSC has developed over the past 25 years strengthens our capabilities in these two important areas and complements our offerings in the bank, independent and insurance segments," McColgan said. "It adds depth and scale to our business, and strengthens our position as a top-tier clearing firm in the United States."
CSC senior executives Robert Basso, Michael Dura, James MacGilvray and Gary Salamone, along with all CSC associates, including relationship managers, will join Fidelity when the transaction is closed, expected during the second quarter. The senior executives will report to Norman R. Malo, president of Fidelitys National Financial unit.