Stifel Financial Corp. is buying KBW Inc. in a cash and stock
transaction valued at $575 million that will create what the two
companies called a middle-market investment bank focused on the
financial services industry.
The combined company will provide investment banking, sales and
trading, and research to financial services companies through KBW's
broker-dealer subsidiary, which will continue to operate as an
independent subsidiary of St. Louis-based Stifel, the companies
said today in a joint press release. Stifel sells securities and
financial advice mainly to individual investors.
Stifel appears to be preparing for a pickup in mergers and
acquisitions in the middle-market segment at precisely the time
when many Wall Street firms are backing away from investment
banking, according to a Reuters report that quoted a number of
"Our shared culture and platforms are highly complementary, and
this combination expands our capabilities at a time when we believe
the financial services sector is poised to benefit from improving
fundamentals," Ronald Kruszewski, Stifel's chairman, president and
chief executive officer, said in the prepared statement.
The acquisition, which values KBW at $17.50 a share, is also
peripherally relevant to the indexing and ETF industries to the
extent that KBW also has an indexing business, and those benchmarks
are used in a number of funds.
Two funds in particular from Invesco PowerShares are noteworthy
in terms of their assets under management:the $165.7 million
PowerShares KBW Bank Portfolio (NYSEArca:KBWB) and the $119.5
PowerShares KBW High Dividend Yield Financial Portfolio
Terms Of The Deal
Under terms of the acquisition, KBW shareholders will receive
$10 per share in cash and $7.50 per share in Stifel's common
The companies said about $250 million in excess capital on KBW's
balance sheet should be immediately available to Stifel upon
The acquisition is expected to boost Stifel's per share
earnings by about 5 to 7 percent, after cost savings, according to
the Reuters report that cited comments by officials from both
companies during a conference call with analysts today.
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