Stifel in talks to acquire Sterne Agee

A deal, which would combine two of the biggest U.S. brokerages outside of New York, could be announced within days, according to a person with direct knowledge of the matter.
JUL 18, 2014
Stifel Financial Corp. is in discussions to acquire Sterne Agee Group Inc., combining two of the biggest U.S. brokerages outside of New York, according to a person with direct knowledge of the matter. A deal may be announced within days, said the person, who asked for anonymity because discussions are confidential. Stifel Chief Executive Officer Ron Kruszewski has snapped up firms including KBW Inc. and Thomas Weisel Partners Group Inc. in the wake of the financial crisis, as shrinking margins and the challenges of adapting to new technology and regulations push brokerages to merge or shutter. Sterne Agee would be giving up its independence after more than doubling its credit trading and sales team in less than four years, and ousting and suing its longtime CEO last year. (More: $2.5 billion adviser duo fired by Merrill Lynch lands at Stifel) A deal with Sterne Agee would follow St. Louis-based Stifel's $575 million purchase of KBW, which was announced in 2012. Stifel also picked up a bond-trading business in 2013 from Knight Capital Group Inc., which had almost collapsed after its computers generated a flood of errant orders. Turmoil at companies and across the market creates opportunities for acquisitions, Mr. Kruszewski told investors at a conference in September. “We go in and provide stability, provide operational stability and a good culture,” he said. “We stabilize situations.” NEEDLEMAN'S PROMOTION When Mr. Kruszewski became CEO in 1997, Stifel employed 733 people and had annual revenue of $136 million. There are now more than 6,000 employees, and its annual revenue exceeded $2 billion in the year through Sept. 30. Sterne Agee, which calls itself one of the oldest and largest closely held financial services firms, traces its roots to a company founded in 1901 by a mayor of Birmingham, Ala. The bank now employs more than 2,000 people in capital markets, wealth management and mortgage origination, according to its website. Sterne Agee promoted Eric Needleman, a New York bond trader, to chairman last year.

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