Piper Jaffray has agreed to acquire US-based multinational independent investment bank Sandler O’Neill + Partners for $485m (£389.65m) in a cash-cum-stock deal.


Image: Sandler O’Neill + Partners to be acquired by Piper Jaffray. Photo: courtesy of Piper Jaffray Companies.

Established in 1895, the Minneapolis-based Piper Jaffray is an investment bank and institutional securities company having offices across the US and in London, Aberdeen and Hong Kong.

The company partners with corporate clients and financial sponsors to offer advisory and financing services pertaining to mergers and acquisitions (M&A), equity and debt capital markets, corporate and venture services, private placements, and restructuring and special situations.

On the other hand, the New York-based Sandler O’Neill is a full-service investment banking company which caters to the financial industry through its advisory and transaction execution services. The company specialises in M&A, capital markets, investment portfolio, and interest rate risk management among others.

The proposed merger of the two firms is expected to fast track the goal of the Piper Jaffray in prioritising and building its M&A advisory business. It will also add a differentiated fixed income business and considerably grow the breadth and depth of the equity research, and sales and trading franchise of the company.

The combined advisory services revenues of the two firms in 2018 were $573m (£460.35m), while the combined investment banking revenues for the same year were $839m (£674m).

The merger is expected to nearly double revenues for Piper Jaffray’s fixed income business apart from creating a platform with top middle-market advisory practices in various industry sectors.

The combined company will be named Piper Sandler Companies.

Piper Jaffray CEO Chad Abraham said: “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.”

As per the terms, Piper Jaffray will pay $350m (£281.19m) at the time of closing of the deal and issue $135m (£108.46m) worth shares to the employee partners of Sandler O’Neill. Apart from that, Piper Jaffray agreed to offer $115m (£92.39m) in long-term retention incentive to Sandler O’Neill’s employees.

Sandler O’Neill senior managing principal Jimmy Dunne said: “We are excited to combine with Piper Jaffray and build on the strength of both of our businesses.

“We truly believe this is the best fit and best opportunity for Sandler O’Neill and our clients.”

The merger, which is subject to receipt of required regulatory approvals and other customary closing conditions, is expected to be wrapped up in January 2020.