Stifel Financial buys Legg Mason Capital Markets

Stifel will purchase primarily the fixed assets and securities inventories of the business from Citigroup Inc., which recently acquired it from Legg Mason Inc.

The purchase price will equal the net book value of Legg Mason Capital Markets’ assets being acquired, plus a premium of $7 million. Stifel also agreed to a potential earn-out payment to Citigroup of up to $30 million based on the performance of the business in the next three fiscal years. The transaction is expected to close in the fourth quarter.

In a separate transaction, Stifel agreed to issue about 1.37 million shares of restricted stock units to key associates of Legg Mason Capital Markets.

All 525 associates of Legg Mason Capital Markets will remain at their current locations and will join the Capital Markets Division of Stifel, Nicolaus & Co. Combined the firm would have about 1,840 associates in 117 offices worldwide.

The acquired business includes departments of investment banking, equity and fixed income research, equity sales and trading, structured finance and taxable fixed income sales and trading.

“Not only will we nearly double our size and increase our footprint, but we will greatly enhance our capabilities,” said Ronald J. Kruszewski, chairman and CEO of Stifel Financial and Stifel, Nicolaus & Co. in a news release. “The combined talents mean we will now have substantial research and capital market capabilities tailor-made to serve our clients.”

Stifel, Nicolaus & Co. is a regional full-service brokerage and investment banking firm with headquarters in St. Louis and a Springfield office at 1935 E. Battlefield Rd., Ste. C.

Tink Woolsey, branch manager for the Springfield office, said the acquisition will have no significant effect on local operations or staffing.

“The only impact should be that we’ll get a better flow if investment ideas and products at the branch level,” he said.

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