Piper Jaffray to buy Sandler O’Neill in $485m deal

Piper Jaffray has agreed to buy Sandler O’Neill + Partners in a $485m deal.

Under the terms of the agreement, Piper Jaffray will pay $350m in cash to Sandler O’Neill equity holders at closing, and $135m in restricted consideration, to Sandler O’Neill employee partners.

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".

Piper Jaffray said the combination accelerates its goal of prioritising 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.

"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," Piper Jaffray chief executive Chad Abraham.

"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."

The enlarged entity will have 2018 pro forma combined advisory services revenues of $573m and combined investment banking revenues of $839m. In addition, the deal nearly doubles revenues for the Piper Jaffray fixed income business.

It’s expected to be more than 10% accretive to non-GAAP earnings per share in 2020 and boost Piper Jaffray’s operating margin, return on equity and employee productivity metrics.