Mellon agrees to acquire Paragon

Monday, July 12, 2004 | 10:48 a.m.

SUN STAFF AND WIRE REPORTS

Mellon Financial Corp., which runs Dreyfus mutual funds, agreed today to buy closely held Paragon Asset Management Co. to expand its wealth management business in the Las Vegas Valley.

The purchase will give Pittsburgh-based Mellon almost $600 million in assets, the company said in a statement. Terms weren't disclosed for the acquisition, which is expected to close this quarter.

Las Vegas is one of the fastest-growing economies in the U.S. and will give Mellon a base from which to serve customers in the Southwest, the company said. Firms including Mellon, Amvescap Plc and U.S. Trust Corp. have been trying to add wealthy individuals as clients because of the higher fees they receive from the assets.

"This is creating a good opportunity for (Mellon)," said Richard Bove, an analyst at Pinellas Park, Florida-based Hoefer & Arnett Inc. He has a "neutral" rating on the stock and doesn't own any.

Henderson-based Paragon is the sixth purchase in four years for Mellon's private wealth unit. In April, Mellon agreed to buy Safeco Corp.'s trust unit for an undisclosed amount to expand its asset- management business in Washington. Paragon also handles money for companies and municipalities.

Paragon is operated by Ted Schlazer and Robert Kasner. The company manages the financial portfolios for municipalities including Clark County, the city of Henderson and the city of North Las Vegas. It also manages portfolios for Business Bank of Nevada, LandWell Co. and Silver State Bank.

Prior to forming Paragon in 1996, Schlazer was an investment manager for First Interstate Bank of Nevada. Kasner was finance director for the city of Henderson.

Kasner and Schlazer will stay on with the company after the merger is completed. The company will take the Mellon Financial name.

Schlazer said the merger should not disrupt the business for existing clients and ultimately provide new services and the opportunity to expand the business with additional product offerings.

Paragon has specialized in fixed-income investments. The added equity research capabilities of Mellon will allow the company to expand. Schlazer said the company has already hired a full-time sales person and an equity manager with added support staff are expected soon.

"Things are moving pretty quickly," he said. "We're excited."

Shares of Mellon fell 2 cents to $27.88 as of 10:02 a.m. in New York Stock Exchange composite trading. They have declined 13 percent this year.

Mellon oversees $3.6 trillion in assets under management, administration or custody, including $75 billion in its private wealth management unit. The company also owns the U.K.-based Newton Investment Management Ltd.