Piper Jaffray to Purchase Sandler O’Neill
Investment bank Piper Jaffray has reached a deal to acquire Sandler O’Neill for $350 million in cash and $135 million in restricted stock.
The acquisition is expected to add $300 million in annual revenue for the broker-dealer.
“We talked for a long time that we could get to 125 managing directors and $750 million in investment banking revenue,” said Chad Abraham, chief executive officer of Piper Jaffray, during a joint conference call. “This transaction get us there quickly.”
The parties expect the deal to close in January 2020, when the firms will merge their broker-dealer businesses.
Abraham expects the integration of Sandler O’Neill into what will become Piper Sandler Companies to be relatively seamless.
“The integration will take some time, but to be honest with you, many ways this much more simple than other things we have done like Weeden with all of the technologies and trading platforms,” he said.
Jimmy Dunne, senior managing principal at Sandler O’Neill, will take on the role of vice-chairman of the re-named firm while serving as senior managing principal of the firm’s financial services business.
Jon Doyle, senior managing principal at Sandler O’Neill, will be named vice chairman, senior managing principal, and head of the financial services group. In his new role, Doyle will oversee the firm’s investment banking, capital markets, fixed income, and equities business lines dedicated to the financial services industry, according to company officials.
“We are thrilled for what this will do for our fixed income business,” said Abraham “It’s a real opportunity for our combined fixed income business. Sandler has a very advice-driven model with deep penetration and covering 1,000 banks, very strong analytics, a broad suite of products. We think that it will provide fantastic broad distribution to our municipal, new issue, and secondary fixed income business.”
The financial firms may not merge their respective fixed income groups completely, but Doyle would welcome anyone from Piper’s municipal and middle-market business lines to the new financial services group.
“We are going to spend some time in short order talking to and hopefully bringing some people along,” he said during the call. “They can stay where they are, but we are an energetic crew in regards to how we cover fixed-income. We do a lot of derivatives, a lot of advisory work, and a lot of restructurings for companies. We are hoping to impart some of our knowledge to Piper while also working with some of those municipal people who are very good at what they do.”
The deal should boost the firm's LME operations in Germany, say officials.
The deal entails the acquisition of three of the firm's brokerage businesses.
Schwab estimates a $1.8B to $2B run-rate expense synergies within three years of the deal's close.
The acquisition extends the vendor's SaaS offerings to private debt markets.
The purchase should bolster the firm's trading technology and quantitative research.