The largest merger in Wall Street history was cemented yesterday as stockholders of Reynolds Securities International, Inc., and the Dean Witter Organization, Inc., voted to form a combined company that will rank among the three largest U.S. securities firms.
Starting on Jan. 3, the new company's offices around the country will begin doing business under the name of Dean Witter Reynolds Organization, Inc., following votes of approval yesterday at simultaneous meetings in New York and San Francisco.
Total capitalization of the merged company exceeds $160 million. The combination is expected to result in only a modest amount of cutting back, since Reynolds and California-based Witter operations generally have not been duplicative. Dean Witter Reynolds will rank second in sales behind Merrill Lynch & Co., and third in capitalization behind Merrill Lynch and Salomon Brothers.
Reynolds chairman Robert M. Gardiner, who will become a vice chairman of the merged company, said in a recent interview here that Dean Witter Reynolds will maintain all current offices in the Washington area, for example.
He also forecast continuation of a trend toward more combinations of securities firms. "If you witch the world around us . . . we have to get bigger and stronger to provide competition in this industry as it has developed," in the wake of government action forcing an end to fixed commission rates in 1975, Gardiner asserted.
They Reynolds vice president in Washington, Melvin O. Wright, will take over as head of a Dean Witter Reynolds southeast division, with about 20 offices from Washington to Atlanta. Downtown, the company will retain a current Dean Witter branch.
Nationwide, Reynolds has 95 sales offices in 26 states and the District, primarily in the southeast and Eastern Seaboard. Writer has 147 offices in 39 states and D.C., primarily in the West. Both companies have overseas operations, in addition.
The combination of these facilities into one bigger business firm was scrutinized by the Justice Department's antitrust division for potential anti-competitive impact but the government has made no statement of opposition to date.
Other Wall Street mergers have been proposed in recent weeks and Gardiner said he does not expect the trend to "stop any time soon," as securities companies become bigger and more capable of offering diversified financial service products.
He said smaller, regional firms probably will be forced to take some steps to compete with the new Wall Street giants, perhaps by forming loosely-knit federations to build up combined financial resources for some services. "Some federation is needed to centralize order flows from customers, the cost of research and execution of orders." Gardiner stated.
The particular foundation for the Dean Witter Reynolds combination, he added, is a "blending of the best talents from both organizations." The combined firm, based in San Francisco, will have greater corporate financial expertise, a Witter strong point, and "materially improved" research capability, Gardiner said.
In addition, the combined firm will have a more liberal plan of compensation to sales executives, providing greater incentives.
William M. Witter of Dean Witter will become board chairman and chief executive of the merged company.
As a result of yesterday's approval by stockholders of the companies, six-tenths of a share of the new firm will be exchanged for one share of Reynolds and one share of Witter preferred stock will be exchanged for each share of Reynolds preferred stock.