ST. LOUIS (AFX) - Financial services provider Stifel Financial Corp. said Tuesday it is buying Ryan Beck Holdings Inc. from BankAtlantic Bancorp Inc. for $91.1 million in stock plus contingent earn-out payments.
Under terms of the deal, Stifel will swap 2.53 million of its common shares worth $36 each, or $91.1 million in total. It may substitute cash for up to 150,000 shares at closing. Five-year warrants also will be issued to buy up to 500,000 shares of Stifel's common stock at an exercise price of $36 each.
One contingent payment, which is capped at $40 million, is based on defined revenue attributed to specific individuals in Ryan Beck's existing private client division over the two-year period following closing. A second payment is based on defined revenue attributed to certain individuals in Ryan Beck's existing investment banking division. The investment banking earn-out is equal to 25 percent of total investment banking fees over $25 million for each of the next two years. Stifel may pay the earn-out payments in cash or stock.
Stifel will also create a retention program valued at $42 million. Ben Plotkin, presently CEO of Ryan Beck, will be joining Stifel Financial's board and will continue to serve as chairman of Ryan Beck.
'By adding this talented group of professionals, we meet our goal of expanding in the East and Southeast, where we began to build a presence through our successful acquisition and integration of the Legg Mason Capital Markets Group last year,' Ronald J. Kruszewski, chairman and chief executive of Stifel Financial and Stifel, Nicolaus & Co., said in a statement.
The deal is expected to close in the first quarter, subject to customary closing conditions and required government and regulatory approvals. The acquisition cancels BankAtlantic's original plan, filed in early 2006, to sell part or all of Ryan Beck in an initial public offering.
'It was the Stifel track record that convinced us that a primarily stock-based payment was preferable, providing BankAtlantic the opportunity to maximize the return on our investment in Ryan Beck,' said BankAtlantic Chairman and CEO Alan B. Levan. 'While we have no immediate plans to sell any of the Stifel stock that we will be receiving and there are limitations on our sale of the stock, we do anticipate gradually reducing our investment. We anticipate the resulting proceeds will be used to support future growth of the BankAtlantic franchise, and provide additional funding of our on-going stock repurchase program and investments.'
Ryan Beck provides financial advice and services to individuals, institutions, and corporate clients through about 1,000 employees in 40 offices located in 14 states. Stifel Nicolaus is one of the largest middle-market regional investment banks with about 1,800 employees in more than 131 offices throughout the U.S. and 3 in Europe.
Stifel shares closed Monday at $38.09 on the NYSE, representing a 5.5 percent premium to the value of the shares to be issued to BankAtlantic in the deal. BankAtlantic Bancorp shares closed Monday at $13.55, also on the Big Board.
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