J-W Wire Reports
Kansas City, Mo. -- A week after H&R Block Inc. announced the latest in a series of aggressive and expensive acquisitions, company officials Wednesday sought to calm shareholders worried about a recent decline in the company's stock.
H&R Block also said it gave chief operating officer Mark A. Ernst the additional title of company president. Ernst, 41, who joined the company last September as executive vice president and chief operating officer, also was elected to the board of directors.
Frank Salizzoni, 61, who is stepping down as president, will continue as chief executive officer of H&R Block. Henry Bloch, 77, will continue as chairman of the board.
Speaking at the company's annual meeting, Salizzoni told a gathering of about 400 investors and executives that the planned acquisition of discount broker Olde Financial Corp. is a key component of H&R Block's strategy to become a "financial partner to mainstream America."
"The acquisition of Olde accelerates the company's ability to become a true financial partner to our tax clients," Salizzoni said.
The company announced the deal for the Detroit, Mich.,-based Olde Sept. 1, and the stock fell more than 16 percent in the two days after the announcement. It has only slightly recovered since then.
During the meeting, Henry Berghoef, of the Harris Associates investment management firm in Chicago, whose clients own about 8 percent of H&R Block stock, questioned the wisdom of the Olde deal and asked how the company planned to restore its market capitalization.
Another investor, Harry Korba of Yonkers, N.Y., questioned officials about integration risks with Olde.
Salizzoni acknowledged Wall Street skepticism with Block's execution of its growth strategy, but said shareholders would be rewarded quickly.
"We have every intention of making this acquisition work," Salizzoni said. "Olde brings the scale needed to quickly expand our financial offerings. And more importantly to shareholders, we expect the Olde acquisition to contribute to earnings immediately."
H&R Block has been on a buying binge of late, picking up accounting firms and mortgage companies at a rapid pace. The goal is to evolve from the largest tax preparation company in North America into a diversified financial services powerhouse with annual double-digit earnings growth.
To that end, the company has acquired seven regional accounting firms over the past year and a half, including the Aug. 2 purchase of McGladrey & Pullen, the nation's seventh-largest accounting and consulting firm.
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