Stifel Financial signed an agreement to acquire Sterne Agee Group, one of the oldest and largest privately owned financial services firms in the United States for $150 million in cash and stock.
The shares of Stifel climbed 1% to $52.09 per share today.
According to Stifel, the acquisition will enhance its global wealth management segment with the addition of around 730 financial advisors and independent representatives across the country. The deal also complements Stifel’s fixed income platform.
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Stifel-Sterne Agee transaction details
Stifel agreed to acquire Sterne Agee for $150 million, which is composed of a combination of cash and its common stock (valued at $51.55 per share). The cash consideration will be around $66 million to $77 million.
According to Stifel, the amount of stock at the closing of the transaction depends on the shareholder elections (a minimum of 1.42 million shares and maximum of 1.62 million shares).
Stifel estimated that the acquired business would generate approximately $300 million to $325 million in gross annual revenues and to be accretive to shareholder value upon full integration.
Stifel and Stene Agee also agreed to sell back the FBC Mortgage business to its founders. In addition, Stifel also made a commitment to Sterne Agee to operate its Institutional and Investment Banking business as an independent and stand-alone entity.
Stifel said it is committed to finding the right partner or alternatively consider all other strategic alternatives including spinning off the Institutional Equity and Investment Banking business as a separate stand-alone entity.
The transaction is subject to the approval of the shareholders of Sterne Agee, regulatory approvals and customary closing conditions. The companies expected to close the deal in the latter of spring this year.
In a statement, Stifel Chairman and CEO Ronald Kruszewkski said Sterne Agee is a great firm to boost the company’s global wealth management group. He added that Sternee Agee’s fixed income platform is highly complementary to Stifel’s existing products and services.
According to him, the combination of the Stifel and Sterne Agee will catapult the business into a new level and continue the momentum they established with the addition of the recently acquired fixed income sales and trading business from Knight Capital.
“This acquisition furthers our goal of creating a balanced, well-diversified business mix with wealth management and institutional exposure,” said Kruszewski.
On the other hand, Sterne Agee Chairman Eric Needleman said, “We believe that the time is right to merge our company with Stifel to allow our shareholders, clients and employees the opportunity to continue to prosper in the ever-challenging financial services arena. Our goal of being a preeminent financial services company has not changed, but we are accelerating this plan by joining together with a like-minded company with a similar legacy.”