Stifel Nicolaus picks up UBS branches, reps

Stifel Nicolaus is picking up dozens of low-producing branches and 320 registered representatives and advisers from UBS Financial.

If all of them join Stifel Nicolaus, the cost of the acquisition could be as much as $46 million, not including payments associated with future “earn-outs” based on the advisers’ production and sales for a two-year period following the close of the deal, said Joel Jeffrey and Lauren Smith, analysts with Keefe Bruyette & Woods Inc. of New York.

Stifel Nicolaus & Co. Inc. has 203 branch offices and almost 1,400 advisers.

UBS Financial Services Inc. of New York will shed up to 55 branches that generated $116 million in revenue last year, the firm said.

That means each branch generates on average $2.1 million in fees and commissions.

The reps and advisers control about $15 billion in client assets.

Industry observers said that the deal, slated to close in the third quarter, appears to fit UBS Financial’s desire to continue to move upscale and to work with bigger-producing advisers and offices.

In an e-mail, UBS Financial spokes-man Kris Kagel wrote that he couldn’t comment about the branch production numbers, because UBS doesn’t cite those statistics for individual branches.

The sale includes a sliver of UBS Financial’s total revenue, he wrote.

“The branches that will potentially be sold represent 2% of the revenue of wealth management [in the] U.S.,” Mr. Kagel wrote.

UBS Financial’s move to cut ties with lower-producing brokers and advisers should come as no surprise in this market.

BROKERS DUMPED

In the past few months, other wirehouses, including Smith Barney of New York, have dumped brokers and advisers who generated less than $500,000 in fees and commissions.

Many have landed at regional firms such as Stifel Nicolaus, which is the retail-brokerage unit of Stifel Financial Corp. of St. Louis.

Stifel Financial president and chief executive Ronald J. Kruszewski wants investors to regard the acquisition as a “mass hire of people.”

“We’re out recruiting every day. And in one fell swoop, we can add in excess of 300 financial advisers on very, all-in attractive financial terms,” he said during a conference call with analysts and investors last Monday.

Zurich, Switzerland-based UBS AG is the parent company of UBS Financial.

E-mail Bruce Kelly at [email protected].