Merger Adds the Leading Financial Services Investment Banking
Firm to the Growing Piper Jaffray Organization
Piper Jaffray Companies (NYSE: PJC) and Sandler O’Neill +
Partners, L.P. today announced they have entered into a definitive
merger agreement. The combined company will be named Piper Sandler
Companies and will bring together the leading investment banking
firm focused on the financial services industry with the growing
Piper Jaffray investment banking platform. The combination
accelerates Piper Jaffray’s goal of prioritizing and building its
M&A advisory business, adds a differentiated fixed income
business and significantly expands the breadth and depth of the
firm’s equity research, and sales and trading franchise.
Under the terms of the merger agreement, Piper Jaffray will
acquire 100% of the equity and partnership interests in Sandler
O’Neill. The transaction consideration will total $485 million,
which is based on $100 million of tangible book value on the
Sandler O’Neill balance sheet delivered at the time of closing.
Piper Jaffray will pay $350 million in cash to Sandler O’Neill
equity holders at the time of closing; and $135 million in
restricted consideration, primarily in restricted stock of Piper
Jaffray Companies, to Sandler O’Neill employee partners. In
addition, Piper Jaffray agreed to provide $115 million in long-term
retention incentives, primarily in restricted stock of Piper
Jaffray Companies, to Sandler O’Neill employees. All Sandler
O’Neill partners have entered into employment agreements in
connection with the transaction.
Transaction Highlights
- 2018 pro forma combined advisory services revenues of $573
million
- 2018 pro forma combined investment banking revenues of $839
million
- Nearly doubles revenues for the Piper Jaffray fixed income
business
- Expected to be over 10% accretive to Non-GAAP EPS in 2020
- Increases Piper Jaffray operating margin, ROE and employee
productivity metrics
- Creates platform with leading middle-market advisory practices
in multiple industry sectors
Following the merger, Jimmy Dunne, senior managing principal at
Sandler O’Neill, will be named vice chairman of Piper Sandler and
senior managing principal of Piper Sandler’s financial services
business. Dunne will continue to focus on exactly the same work
that he has been doing for the past several years, providing
guidance and strategic advice to clients on M&A deals and other
transactions. Jon Doyle, senior managing principal at Sandler
O’Neill, will lead Piper Sandler’s financial services business line
and all investment banking, capital markets, fixed income and
equities resources dedicated to the financial services industry
will report to him. Doyle will be named vice chairman, senior
managing principal and head of the financial services group of
Piper Sandler. Doyle will also join the board of directors of Piper
Sandler Companies, as well as the firm’s leadership team. Existing
Piper Jaffray investment banking, capital markets, fixed income and
equities personnel dedicated to the financial services sector will
be combined with the Sandler O’Neill team.
“Transactions in investment banking are always about the people
and culture. We have a long history with Sandler O’Neill. We admire
the quality of their professionals, the business they have built
and the culture of the firm which is based on many values we
share,” said Chad Abraham, chief executive officer of Piper
Jaffray. “Piper Jaffray is very focused on competing in market
sectors where we can be a market leader and leverage our specific
expertise. With Sandler O’Neill, we start with the market leader
and could not be positioned better to compete in the financial
services sector over time. This transaction strengthens,
diversifies and accelerates the growth of the Piper Jaffray
investment banking, capital markets and institutional distribution
businesses.”
“We are excited to combine with Piper Jaffray and build on the
strength of both of our businesses,” said Jimmy Dunne. “We truly
believe this is the best fit and best opportunity for Sandler
O’Neill and our clients. I’m extremely proud of what we have built
over the past 30 years and thrilled to have found a partner that
shares our passion for the business. I’m committed to the future of
the firm and looking forward to all we can accomplish together for
our clients.”
“I’m excited to be leading the expanded financial services
practice at Piper Sandler and joining the board of directors,” said
Jon Doyle. “We believe, in partnership, we will leverage our talent
and expertise to enhance our combined capabilities. With Piper
Jaffray’s scale and our shared vision, we look forward to growing
our business for the future.”
Founded in 1988, Sandler O’Neill is the leading investment
banking firm focused on the financial services industry. Sandler
O’Neill has advised on more financial services M&A transactions
than any other investment bank every year since 2012. In that
timeframe, Sandler O’Neill has advised clients on 498 financial
services M&A transactions with an aggregate deal value of $124
billion.1 Sandler O’Neill also ranks #1 in capital raising for
financial institutions since 2012, raising more than $100 billion
in equity and debt capital for its clients.2 Sandler O’Neill brings
more than 300 professionals to the combined company, with 85% of
these professionals serving in client-facing positions. Over 90% of
Sandler O’Neill partners have been with the firm for over 10
years.
The new Piper Sandler platform will have industry leading
advisory practices in financial services, healthcare and energy
with growing franchises in consumer, diversified industrials and
technology. Together, the capital markets business will provide
clients with tailored offering structures and present a range of
equity and debt financing options to help fuel growth. The combined
fixed income business of Piper Sandler will be an advisory-first
business model, focused on providing clients with balance sheet
management, portfolio analytics and municipal expertise. The joined
equity brokerage platform will be among the broadest and largest of
any middle market investment bank and positioned to provide unique
insights, execution expertise and creative financing solutions
across all of the firm’s industry groups.
The transaction is expected to close in January 2020 and is
subject to obtaining required regulatory approvals and other
customary closing conditions.
Piper Jaffray was advised by its wholly owned subsidiary, Piper
Jaffray & Co., and was represented by Sullivan & Cromwell
LLP. JMP Securities rendered a fairness opinion to the board of
directors of Piper Jaffray Companies. Sandler O’Neill was
represented by Wachtell, Lipton, Rosen & Katz.
Conference Call
Piper Jaffray will hold a conference call at 9 a.m. ET (8 a.m.
CT) today, July 9, 2019. Chad Abraham, chief executive officer of
Piper Jaffray; Jimmy Dunne and Jon Doyle, senior managing
principals of Sandler O’Neill; and Tim Carter, chief financial
officer of Piper Jaffray, will review the announced transaction.
Following the review, there will be a question and answer
session.
The call can be accessed by dialing 888 810-0209 (domestic) or
706 902-1361 (international) and referencing reservation number:
3172768. Those who wish to view the accompanying presentation
slides can join the webcast via the transaction page on Piper
Jaffray’s website at www.piperjaffray.com/pipersandler.
Participants should dial in at least 15 minutes prior to the call
time.
A replay of the conference call will be available for thirty
days beginning at approximately noon ET on July 9, 2019 by calling
855 859-2056 and referencing reservation number: 3172768. The
webcast replay and presentation slides will also be available at
www.piperjaffray.com/pipersandler.
About Piper Jaffray
Piper Jaffray is a leading investment bank and institutional
securities firm driven to help clients Realize the Power of
Partnership®. Through a distinct combination of candid counsel,
focused expertise and empowered employees, we deliver insight and
impact to each and every relationship. Our proven advisory teams
combine deep product and sector expertise with ready access to
global capital. Founded in 1895, the firm is headquartered in
Minneapolis with offices across the United States and in London,
Aberdeen and Hong Kong. www.piperjaffray.com
About Sandler O’Neill + Partners, L.P.
Sandler O’Neill is a full-service investment banking firm
dedicated to providing comprehensive, innovative advisory and
transaction execution services to the financial industry. The firm
specializes in strategic business planning, mergers and
acquisitions, capital markets, mutual to stock conversions,
investment portfolio and interest rate risk management, fixed
income securities transactions, and mortgage finance
restructurings.
Sandler O’Neill also is a market maker in hundreds of financial
stocks and publishes equity research focused on selected banks and
thrifts, insurance companies, investment banks, asset managers,
specialty finance companies, e-finance companies, real estate
investment trusts, and financial technology companies. For
additional information about the firm, please visit the website at
www.sandleroneill.com.
Cautionary Note Regarding Forward-Looking Information
This announcement contains forward-looking statements.
Statements that are not historical or current facts, including
statements about beliefs and expectations, are forward-looking
statements. These forward-looking statements cover, among other
things, the future prospects and growth of the Company.
Forward-looking statements involve inherent risks and
uncertainties, and important factors could cause actual results to
differ materially from those anticipated, including the following:
(1) the transaction described in this announcement is subject to
regulatory approval and other closing conditions and may not close
on the expected timing or at all; (2) the costs or difficulties
relating to the combination of the businesses may be greater than
expected and may adversely affect our results of operations and
financial condition and our ability to realize anticipated
synergies from the transaction; (3) the expected benefits of the
transaction, including the future prospects of our investment
banking, fixed income, equity research, and sales and trading
businesses may take longer than anticipated to achieve and may not
be achieved in their entirety or at all, and will in part depend on
the ability of the Company to retain and hire key personnel and
maintain relationships with its clients; (4) developments in market
and economic conditions have in the past adversely affected, and
may in the future adversely affect, the business and profitability
of the Company generally and of its investment banking business
specifically; (5) the transaction increases the Company’s exposure
to the financial services industry; (6) there may be potentially
adverse reactions or changes to client, regulatory, business or
employee relationships, including as a result of the announcement
or completion of the transaction, (7) the failure to obtain
financing for the transaction consistent with our expectations or
at all could adversely impact the Company and the expected benefits
of the transaction and (8) other factors identified under “Risk
Factors” in Part I, Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2018, and updated in our subsequent
reports filed with the SEC. These reports are available at
www.piperjaffray.com or www.sec.gov. Forward-looking statements
speak only as of the date they are made, and we undertake no
obligation to update them in light of new information or future
events.
Piper Jaffray Companies (NYSE: PJC) is a leading investment bank
and institutional securities firm driven to help clients Realize
the Power of Partnership®. Securities brokerage and investment
banking services are offered in the U.S. through Piper Jaffray
& Co., member SIPC and FINRA; in Europe through Piper Jaffray
Ltd., authorized and regulated by the U.K. Financial Conduct
Authority; and in Hong Kong through Piper Jaffray Hong Kong
Limited, authorized and regulated by the Securities and Futures
Commission. Asset management products and services are offered
through five separate investment advisory affiliates―U.S.
Securities and Exchange Commission (SEC) registered Advisory
Research, Inc., Piper Jaffray Investment Management LLC, PJC
Capital Partners LLC and Piper Jaffray & Co., and
Guernsey-based Parallel General Partners Limited, authorized and
regulated by the Guernsey Financial Services Commission.
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© 2019 Piper Jaffray Companies. 800 Nicollet Mall, Suite 1000,
Minneapolis, Minnesota 55402-7036
1 Source: S&P Global Market Intelligence, 1/1/2012 –
12/31/2018. Includes transactions with announced deal values.
2 Source: S&P Global Market Intelligence, 1/1/2012 –
12/31/2018. Full deal value credited to underwriter.
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version on businesswire.com: https://www.businesswire.com/news/home/20190709005330/en/
Piper Jaffray Pamela Steensland Tel: 612 303-8185
pamela.k.steensland@pjc.com
Sandler O’Neill Nick Lawler Tel: 212 466-8071
nlawler@sandleroneill.com
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