Stifel Financial to buy Ryan Beck Holdings

January 10, 2007|By M. William Salganik | M. William Salganik,Sun reporter

Stifel Financial Corp., which established a large foothold in Baltimore when it bought a chunk of Legg Mason Inc., announced yesterday that it is acquiring New Jersey-based Ryan Beck Holdings Inc., in a $100 million deal that will increase Stifel's size by about 50 percent.

The deal will have no immediate impact on Stifel's 300 employees in Baltimore, or on Ryan Beck's 25 to 30, although the combination should help the business to grow over time, said Ronald J. Kruszewski, Stifel's chairman and chief executive officer.

"I can't think of a single person in Baltimore whose job is at risk," Kruszewski said.

Stifel, based in St. Louis, calls Baltimore its "second headquarters" as a result of its acquisition of Legg Mason's capital market group, including operations in research, sales, trading and investment banking.

It recently signed an 11-year lease for space - including an empty floor to accommodate anticipated growth - in One South Street, a building which had been occupied largely by Alex. Brown & Sons before that company was sold eight years ago.

"We would not have been able to execute this transaction if we hadn't acquired Legg Mason's capital markets group," Kruszewski said.

He said the resources Stifel picked up from Legg "made us very attractive" to Ryan Beck as a potential partner.

Legg's division became available in 2005 when Legg swapped its brokerage business for the asset management unit of Citigroup Inc.

Kruszewski said at the time it acquired Legg's division that Stifel planned to expand beyond its Midwestern base to the Mid-Atlantic and Southeast and grow from about 700 brokers and consultants to more than 1,000. The Ryan Beck transaction achieves both goals.

Investors applauded the deal, sending shares of Stifel up $5.18, or 13.6 percent, to $43.27 on the New York Stock Exchange yesterday.

The deal, expected to be completed next month, will add 393 Ryan Beck brokers to Stifel's 730, and $218 million in annual revenue to Stifel's $448 million.

It makes Stifel "the premier middle market investment banking company," Kruszewski told analysts in a conference call yesterday.

Ryan Beck, with headquarters in Florham Park, N.J., has been owned since 1998 by BankAtlantic Bancorp Inc. of Fort Lauderdale, Fla.

BankAtlantic will receive 2.5 million Stifel shares, worth $96.4 million, plus warrants to buy more shares valued at $7.6 million, according to Stifel. Based on revenue from Ryan Beck, Stifel can pay an earn-out worth $20 million based on 2006 production levels; the earn-out is capped at $40 million. That deal will make BankAtlantic a major shareholder in Stifel.

bill.salganik@baltsun.com

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