Southwest Securities sold as part of merger

Hilltop Holdings ups previous offer for SWS Group by 12.6%.
APR 09, 2014
After a dormant couple of months, broker-dealer mergers and acquisitions came to life Tuesday when Hilltop Holdings Inc. and SWS Group Inc., the parent company of Southwest Securities Inc., said that they have entered into a definitive merger agreement. SWS shareholders will receive cash and Hilltop stock worth $7.88 a SWS share. Hilltop, which owns a bank mortgage lender and another financial services firm, First Southwest Co., already controls 24% of SWS common stock. In January, Hilltop offered to acquire for $7 a share the remaining outstanding shares of SWS that it didn't control. Investors are therefore seeing a 12.6% premium over Hilltop's original offer. Shares of SWS were trading at $7.85 a share Tuesday afternoon, up 38 cents, or 5%, after the merger announcement. For the year, SWS shares are up $1.77, or 29%. “This transaction creates the leading Texas-based broker-dealer and provides PlainsCapital Bank access to a significant source of additional core deposits,” Hilltop chairman Gerald J. Ford said in a statement. “The merger will bolster our market share and scale for many business lines within our broker-dealer, as well as our deposit market share in Dallas/Fort Worth.” Southwest Securities Inc. has 150 broker-dealer and registered investment adviser clearing and custody clients. It also has 167 employee registered representatives, mostly in Texas and Oklahoma. SWS Financial Services Inc. is the independent contractor arm of the company, with 297 registered reps. The merger is expected to be completed prior to the end of the year, the two companies said in a statement. Although activity has been quiet of late, M&A activity for independent broker-dealers started this year with a bang. On consecutive days in January, nontraded-REIT czar Nicholas Schorsch said that he was buying Cetera Financial Group for $1.15 billion and J.P Turner & Co. for $27 million.

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