Stifel closes deal to buy KBW in investment bank merger

Fri Feb 15, 2013 9:40pm IST

Ronald Kruszewski, president and CEO of Stifel Financial Corp., speaks at the Reuters Wealth Management in New York, November 2, 2010. REUTERS/Brendan McDermid

Ronald Kruszewski, president and CEO of Stifel Financial Corp., speaks at the Reuters Wealth Management in New York, November 2, 2010.

Credit: Reuters/Brendan McDermid

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(Reuters) - Stifel Financial Corp (SF.N) and KBW Inc KBW.N said Friday they have completed the merger under which St. Louis-based Stifel paid about $575 million in cash and stock for New York-based KBW.

Stifel, which has a large retail brokerage business with about 2,000 financial advisers, has been rapidly expanding its institutional securities business. In addition to KBW, which specializes in helping small banks merge, sell and raise capital, it has purchased three other banks since 2010 in an attempt to become what Chairman and Chief Executive Ron Kruszewski calls a "pre-eminent middle-market" investment bank.

Stifel announced its planned acquisition of KBW on November 5.

KBW lost money last year but Kruszewski has defended KBW as ripe for growth as bank directors become more confident in the economy and the value of banking franchises.

"The financial services sector is one of the significant pillars of the economy, which we believe is poised to benefit from improving fundamentals," Kruszewski said in a prepared statement.

Stifel said KBW will retain its brand name and that KBW CEO Thomas Michaud will retain his title.

Some investors have said that integrating KBW with Stifel's smaller financial services banking business may prove more difficult than past integrations.

Prior to the opening of the market on Friday, KBW common shares ceased trading on the New York Stock Exchange.

Shares of Stifel were down 0.4 percent at $39.08 at midmorning on Friday on the NYSE.

(Reporting by Jed Horowitz in New York; editing by Matthew Lewis)

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