Stifel Financial agreed to buy KBW in a cash-and-stock transaction valued at $575 million to build its financial services business.
KBW shareholders will receive $17.50 per share, comprising $10 in cash and $7.50 in Stifel common stock, the companies said in a statement. The deal values KBW, an investment bank and broker-dealer, 7.4% higher than its closing price on Nov. 2.
Stifel, run by CEO Ronald Kruszewski, has been seeking acquisitions to gain market share as the financial services industry recovers from the credit crisis. KBW, which lost 67 employees at its World Trade Center headquarters in the Sept. 11, 2001, attacks, has posted a loss in five of the past six quarters as bank mergers dwindle.
Stifel's acquisitions, including Legg Mason (LM)'s capital markets business and Thomas Weisel Partners Group, have helped the firm post record net revenue every year since 1997, when Mr. Kruszewski became CEO. The KBW deal will make Stifel the No. 1 adviser on mergers and acquisitions in the financial institutions industry, Stifel said in a web presentation.
The transaction is expected to be completed early next year, Mr. Kruszewski, who is also president and chairman, said Monday on a conference call.
Stifel is offering retention packages to “key” KBW employees, and about 85 people have signed on, Mr. Kruszewski and KBW CEO Thomas Michaud said on the call. Most of the staff cuts will come from employees who don't deal directly with customers, Mr. Kruszewski said.
KBW had its IPO in 2006, and its shares fell 22% through Nov. 2.