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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 15, 1998
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McDONALD & COMPANY INVESTMENTS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-08526 34-1391950
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(State of Other Jurisdiction) (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
McDonald Investment Center, 800 Superior Avenue Cleveland, Ohio 44114-2603
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (216) 443-2300
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
McDonald & Company Investments, Inc. (the "Company") issued a News
Release on June 15, 1998, a copy of which is filed as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
99.1 News Release dated June 15, 1998.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
McDONALD & COMPANY INVESTMENTS, INC.
By: /s/ Robert T. Clutterbuck
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Robert T. Clutterbuck
Treasurer (Principal Financial Officer)
Date: June 16, 1998
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EXHIBIT INDEX
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Exhibit Number Description
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99.1 News Release dated June 15, 1998, from the Company.
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NEWS [KEYCORP LOGO]
KeyCorp
127 Public Square
Cleveland, Ohio 44114-1306
Contact: KeyCorp: McDonald & Company Investments:
(Media) William Murschel Richard J. Clark
(216) 689-0457 (216) 443-2614
(Analysts) Lee Irving
(216) 689-3564
KEYCORP TO ACQUIRE MCDONALD & COMPANY
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PARTNERSHIP CREATES NATIONAL PLATFORM FOR ENHANCING BUSINESS, PRIVATE CLIENT
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RELATIONSHIPS
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CLEVELAND, June 15, 1998 - KeyCorp (NYSE:KEY) and McDonald & Company
Investments, Inc. (NYSE:MDD) today announced an agreement under which KeyCorp
will acquire McDonald & Company, a full-service investment banking and
securities brokerage company.
The McDonald & Company acquisition creates a powerful business for Key,
which will be focused on providing capital markets, investment banking and asset
management expertise to corporate and private clients on a national basis. This
business group will be launched with a revenue base of nearly $1 billion with
the people, products and resources to excel in this rapidly growing segment of
the financial services arena.
The transaction involving the two Cleveland-based companies is valued
at $653 million. Under the terms of the agreement KeyCorp will issue, in a
tax-free exchange, $35 of KeyCorp common stock for each share of McDonald &
Company common stock, subject to possible adjustments if KeyCorp's common stock
price is below $33 or above $44.50 per common share at the time of closing. In
addition, KeyCorp has established a $68 million employee retention program to be
paid in cash and options over a three-year period to certain employees of
McDonald & Company.
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Page 2 - KEYCORP TO ACQUIRE McDONALD & CO.
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KeyCorp expects the transaction to be accretive to earnings in 1999.
The acquisition will be accounted for as a purchase and is expected to close
during the fourth quarter of 1998, subject to McDonald & Company shareholder and
certain regulatory approvals and certain other conditions to closing.
"McDonald & Company is a perfect strategic fit for KeyCorp," said
Robert W. Gillespie, chairman and chief executive officer of KeyCorp. "The
combined businesses of McDonald & Company and Key will be focused on growing our
relationships with corporate/commercial and private clients.
"Perhaps most importantly, McDonald & Company brings a team of superb
professionals, led by Bill Summers, eager to support Key's national business
objectives," said Gillespie.
"This exciting partnership with KeyCorp will create added value for
our individual and corporate clients," said William B. Summers, Jr., president
and chief executive officer of McDonald & Company Investments. "Both companies
share a common vision for the future and have developed performance-driven,
client-focused cultures that enhance opportunities for our employees far beyond
what we could achieve separately."
McDonald's major business activities include investment banking,
corporate finance, equity capital markets and retail brokerage and financial
advisory services. These businesses will be combined with KeyCorp's comparable
businesses. Summers will be chairman, and Yank Heisler will be president of a
new Key Capital Partners business at KeyCorp. Summers will join Heisler as a
member of KeyCorp's Management Committee and will report to Henry L. Meyer III,
KeyCorp president and chief operating officer.
-- more --
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Page 3 - KEYCORP TO ACQUIRE McDONALD & CO.
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The new Key Capital Partners will have two major business groups. One
group, to be operated under the name McDonald-Key Investments, will be led by
Summers, who will be chairman and chief executive officer, and Robert T.
Clutterbuck, who will be president and chief operating officer. Clutterbuck
currently holds that title at McDonald & Company Securities, Inc. McDonald-Key
Investments will house the Section 20 subsidiary and will include retail and
institutional brokerage, equity and fixed income trading and. underwriting,
investment banking, capital markets products, loan syndication and trading,
public finance, venture capital, mezzanine finance and clearing operations. The
second major business group, which will be led by Heisler, will include asset
management, mutual funds, institutional asset services, wealth management and
insurance.
McDonald & Company's headquarters, the 21-story McDonald Investment
Center at 800 Superior Avenue, Cleveland, will be the headquarters for
McDonald-Key Investments.
Gillespie and Summers emphasized their continued commitment to the
Cleveland community through financial and volunteer support. Both executives
said that the short-term job impact from the combination will be minimal, but as
long-range plans for growing these businesses emerge, additional employment
opportunities should be created in the future.
KeyCorp is one of the nation's largest financial services companies,
with assets of approximately $73 billion. Through four principal lines of
business - corporate capital, consumer finance, community banking and capital
partners, Key provides retail and wholesale banking, investment, financing and
money management services to individuals and companies across the U.S. Key
companies have a presence in 46 states from Maine to Alaska.
-more-
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Page 4 - KEYCORP TO ACQUIRE McDONALD & CO.
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Forward Looking Statements:
This news release contains forward-looking statements, such as estimates of
future operating results for both KeyCorp & McDonald & Company Investments, Inc.
These forward-looking statements involve certain risks and uncertainties. Actual
results may differ materially from the results contemplated in these
forward-looking statements. Factors that may cause such a difference include,
but are not limited to: (1) revenues following the acquisition are lower than
expected; (2) expected costs savings from the acquisition cannot fully be
realized or realized within the expected time frame; (3) costs or difficulties
related to the integration of the businesses of KeyCorp & McDonald & Company
Investments, Inc. are greater than expected; (4) competitive pressures among
financial institutions increase significantly; (5) general economic conditions,
either nationally or in the states in which the combined company will be doing
business, are less favorable than expected; and (6) legislation or regulatory
changes adversely affect the businesses in which the combined company would be
engaged.
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FACT SHEET
<TABLE>
<CAPTION>
KEYCORP MCDONALD &
(as of 3/31/98) COMPANY
(fiscal year ended 3/31/98)
<S> <C> <C>
DATE ESTABLISHED 1849 1924
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LISTED NYSE 1992 1983
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NYSE TRADING SYMBOL KEY MDD
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COMMON SHARES OUTSTANDING 439,315,000 18,665,000
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HEADQUARTERS Cleveland, Ohio Cleveland, Ohio
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STATES WITH OFFICES 46 11
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EMPLOYEES 24,650 (full-time 1,400 (full-time
equivalent) equivalent)
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NUMBER OF OFFICES 1,006 full-service 44
KeyCenters
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NUMBER OF RETAIL BROKERS 290 350
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NUMBER OF INVESTMENT BANKING 70 90
PROFESSIONALS
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NUMBER OF CAPITAL MARKETS 110 147
PROFESSIONALS
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NUMBER OF RESEARCH ANALYSTS 12 30
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PROPRIETARY MUTUAL FUNDS Victory Funds (32 funds Gradison Family of
- $11.6 billion) Mutual Funds (6 funds -
$2.9 billion)
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TOTAL ASSETS UNDER MANAGEMENT $64 billion More than $5 billion
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REVENUE $4,100 million (year $333.3 million
ended Dec. 31, 1997)
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NET INCOME $919 million (year $36.8 million
ended Dec. 31, 1997)
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</TABLE>
