UBS targets another broker-dealer hard on its purchase of Piper's retailer. UBS says it plans to buy McDonald Investments' retail brokerage business from Cleveland, Ohio-based KeyCorp for "up to" $280 million. The Swiss megabank says McDonald fits nicely with the retail brokerage business it recently acquired from Piper Jaffray. Together, says UBS, the two acquisitions "strengthen" UBS' U.S wealth-management business.

What's on and off the table

Whether grabbing Piper's and KeyCorp's brokerages truly strengthens UBS remains to be seen. But it certainly gives the Zurich-based wealth-management giant -- an inveterate coast-hugger prior to the Piper purchase -- better geographic distribution. McDonald and its Gradison affiliates have 340 brokers in 51 branch offices in the Northeast, Midwest, Mountain region and Pacific Northwest. When the sale to UBS was announced last spring, Piper had around 800 brokers in 90 branches, most of them west of the Mississippi.

UBS and KeyCorp expect the deal to close early in 2007.

KeyCorp seems keen to emphasize that the sale to UBS touches McDonald's branch network only. McDonald's former institutional businesses -- including investment banking, debt and equity capital markets, public finance and research -- will stay with KeyCorp's KeyBanc Capital Markets unit.

Nor does the deal with UBS put KeyCorp out of the wealth-management realm. "Key will retain its separate and existing Key Trust, Key Wealth Management and Key Private Banking business groups," says KeyCorp CEO Henry Meyer. In addition, KeyCorp's retail banking business will continue offering "products such as mutual funds and annuities," adds Meyer.

The better to eat you with

UBS foreshadowed its plan to purchase another regional broker-dealer late last month. It also said it was thinking about buying a trust company and perhaps an "upscale, boutique" registered investment advisor or two, all the better to compete for assets in the U.S. high-net-worth market.

With the possible exception of Mellon -- apparently on hiatus as it concentrates on rationalizing its service offerings -- UBS is the most acquisitive wealth-management company on the planet.

In addition to Piper and McDonald -- and leaving out its imminent trust and boutique RIA purchases -- UBS has in the past three years bought Lloyds Bank in France, Merrill Lynch's German private banking operations, the U.K.'s Laing & Cruickshank and Scott Goodman Harris, Germany's Sauerborn Trust, Luxembourg's American Express Bank, Julius Baer's North American private-client business, Dresdner Bank's Latin American wealth-management operations and Brazil's Banco Pactual.

And of course UBS bought Paine Webber in 2000.

Other than mentioning the "up to" price of $280 million, UBS and KeyCorp are keeping stumm about the details of the transaction. - FWR

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