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Stifel Shares Details on UBS Acquisition (March 24, 2009)

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St. Louis-based Stifel, Nicolaus & Company says it entered a deal with UBS Financial Services to acquire up to 55 branches and 320 financial advisors from the UBS Wealth Management Americas branch network.

The 55 offices are found in 24 states and include 320 FAs with some $15 billion in assets under management. In 2008, these branches generated roughly revenues of $116 million, including about $100 million in compensable FA revenue.

At present, Stifel Nicolas has 1,368 advisors, including some independent contractors in 203 offices nationwide. Thus, on a pro-forma basis, the broker-dealer could have close to 1,700 advisors, which makes it bigger than Oppenheimer (with 1,400) but smaller than RBC Dain Rauscher (with 2,150) – according to industry data made public by Stifel.

UBS had some 8,200 advisors before this deal was announced on March 23.

“The addition of these UBS branches represents a unique strategic fit,” says Stifel Chairman and CEO Ronald J. Kruszewski,. “The addition of this talented group of professionals furthers our efforts to meet our goal of expanding across the country and further build upon Stifel’s recent growth achieved through our successful acquisitions and integrations of the Legg Mason Capital Markets Group in 2005, Ryan Beck in 2007 and Butler Wick last year.”

The transaction is structured as an asset purchase for cash at a premium over certain balance sheet items, subject to adjustment. The payments to UBS include:

– An upfront cash payment of up to about $27 million based on the actual number of branches and FAs acquired by Stifel Nicolaus;

– Annual earn-out payments for the two-year period following the closing of the transaction principally based on the performance of the UBS advisors who become Stifel Nicolaus employees; and

– Aggregate payments of up to some $19 million for net fixed assets and employee forgivable loans.

The above payments are variable based upon the number of advisors and branches acquired by Stifel Nicolaus. In addition, Stifel Nicolaus has agreed to acquire other client related assets and assume certain liabilities, associated with the branches acquired.

The number of employees, branches and assets to be acquired by Stifel is expected to be determined in roughly 35 to 45 business days. Stifel also says the acquisition should be accretive to its earnings in the first year and could be completed during the third quarter of 2009.


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