Stifel Financial has signed off on a deal to buy KBW, Inc. (NYSE:KBW) for about $575 million in cash and stock. The deal, which was arrived at on Monday, will see Stifel pay $10 a share in cash and the remaining amount at $7.75 a share in stock.
Thomas Michaud, the CEO of KBW, is expected to make an entry into Stifel’s board. Michaud will however, continue to spearhead operations at KBW which will be a detached business division within Stifel Financial Corp. (NYSE:SF). While the terms of the deal are conclusive, the deal is not yet official as KBW’s regulators and shareholders will have to approve the deal.
This deal, underscores Stifel Financial Corp. (NYSE:SF)’s undisguised yearning for a lucrative deal. Over the past few years, the investment bank has inked some notable deals. In mid 2011, it struck a partnership with restructuring specialists Miller Buckfire and has since maintained that it wants to push through with an outright buy. In addition to that, Stifel also bought Thomas rival Weisel towards the end of 2010.
By buying KBW, Inc. (NYSE:KBW), which in full stands for Keefe Bruyette & Woods, Stifel Financial Corp. (NYSE:SF) will make significant inroads into the financial advice segment. KBW has, in the past fifty years of its existence, focused on providing counsel to different firms in the financial services industry, in the process, working with banks and insurance companies. In addition to this, Stifel will also add KBW’s estimable research arm to its portfolio, giving it a competitive edge in the market.
KBW, Inc. (NYSE:KBW) is expected to add some touch of bullishness to Stifel. Having risen 17.5 percent, compared to less than 1 percent for Stifel, KBW has greatly outperformed its impending parent company, Stifel.
Stifel’s top management has shared positive remarks on the deal. Ronald J. Kruszewski, Stifel’s CEO and chairman, noted in a statement that the deal presented an unprecedented opportunity for the company. “This merger with KBW, a premier, specialized financial services firm, provides Stifel with an exciting opportunity to grow and become a market leader in the financial services sector,” he said. Kruszewski also noted that the deal was a good opportunity for the two companies, which share somewhat similar platforms, to increase their capabilities, citing that the financial services sector was poised to benefit from improving fundamentals.
KBW, Inc. (NYSE:KBW)’s shares rose incredibly in premarket trading to $19.15, representing a 17.5 percent increase. Stifel’s shares on the other hand rose 1.9 percent to come in at $32. 50.