LOS ANGELES, Feb. 21, 2017 /PRNewswire/ -- B. Riley
Financial, Inc. (NASDAQ: RILY), a diversified financial services
company, has signed a stock for stock merger agreement to acquire
FBR & Co. ("FBR") (NASDAQ: FBRC), a leading investment banking
and brokerage firm, in a transaction valued at $160.1 million based on Friday's closing price of
$17.55 for B. Riley Financial's
common shares and an anticipated payment of a cash dividend before
closing of $8.50 per share.
B. Riley Financial and FBR combined will become a clear leader
in small cap investment banking and brokerage in the U.S. with 600
names under research coverage.
Together B. Riley Financial and FBR will provide a truly unique
platform to help clients manage their capital and business
prospects across all stages of the company's life cycle. The firm's
capital raising capabilities will range from formation capital and
growth capital to direct lending and recapitalizations, utilizing
144A, ATMs, public market offerings and other creative structures.
The firm will also include one of the world's largest asset
valuation and disposition businesses, as well as a business that
specializes in providing complex restructuring solutions. Each of
these capabilities is attached to a market leading practice within
B. Riley Financial, giving it a thorough understanding of clients'
needs to generate the right solution with world class
execution.
"FBR's leadership in investment banking and its sector coverage,
combined with minimal overlap on our existing brokerage business,
makes this a very powerful combination for our clients," said
Bryant Riley, Chairman and CEO of B.
Riley Financial. "This merger with FBR represents a great strategic
and cultural fit for B. Riley with strong franchises in areas
complementary to our existing businesses. The combined firm will
enjoy an increased capital base as well as meaningful revenue and
expense synergies."
Upon closing, Richard Hendrix,
FBR's current Chairman and CEO, will assume the role of CEO of the
combined investment banking and brokerage business, which will be a
subsidiary of B. Riley Financial.
"Merging with B. Riley creates a market leader in investment
banking and brokerage services. We benefit by becoming an important
component of a broader and more diversified financial services
company led by like-minded and trusted professionals. Together we
can scale and strengthen our business," said Hendrix. "Our
organizations are fueled by employees who are highly knowledgeable
and have an in-depth understanding of their clients and industries.
Both organizations benefit from long-standing relationships with
investors and deep client ties. We look forward to working with the
entire B. Riley team to maximize the value we can deliver to
clients and shareholders with this combination."
Enhanced Capabilities and Market Presence with Limited
Overlap
FBR's banking and brokerage businesses strategically
align with B. Riley's current operations with limited overlap of
clients, coverage and capital raising activities. The transaction
further diversifies the overall business of B. Riley Financial and
adds FBR's market leading initial equity franchise to B. Riley
& Co.'s successful capital markets capabilities. In addition,
the combination allows for expanded geographic distribution reach
with significant operations on the East and West coasts.
"FBR's strong market share in IPOs and 144As, and sector
coverage in key banking sectors, complement our business. Bringing
together the breadth and depth of capabilities of B. Riley and FBR
supports our investments in strategic businesses and growing areas
of our firm like our restructuring, asset disposition, appraisal
business and lending fund," added Riley.
Transaction Value and Closing Details
At closing, FBR
shareholders will receive .671 shares of B. Riley common stock and
an anticipated pre-closing cash dividend of $8.50 per share assuming sufficient funds are
available for distribution. FBR is required to deliver a minimum of
$33.5 million of cash (net of certain
transactional and other expenses) to B. Riley Financial at closing.
Based upon B. Riley Financial's closing stock price on Friday, the
stock and anticipated pre-closing dividend amounts to $20.28 per FBR share.
The transaction has been approved by B. Riley Financial's and
FBR's boards of directors and is subject to regulatory and
shareholder approval from both companies and the satisfaction of
other customary closing conditions. B. Riley and FBR directors and
officers, representing 28 percent and 19 percent respectively, have
agreed to vote their shares in favor of the merger. The transaction
is expected to close during the second quarter of this year.
Sullivan & Cromwell LLP served as legal counsel to B. Riley
Financial. Wachtell, Lipton, Rosen & Katz served as legal
counsel to FBR.
About FBR & Co. (NASDAQ: FBRC)
Founded in 1989,
FBR & Co. has a strong, well-established track record as a full
service investment bank with approximately 260 employees. FBR
provides investment banking, M&A advisory, institutional
brokerage, and research services with focused capital and financial
expertise in consumer; energy & natural resources; financial
institutions; healthcare; insurance; industrials; real estate; and
technology, media & telecom industries. The combined entity
will have offices throughout the U.S., including in New York, Los
Angeles, San Francisco,
Boston, Dallas, Houston and the greater Washington, DC metro region.
About B. Riley Financial (NASDAQ: RILY)
B. Riley
Financial is a publicly traded, diversified financial services
company addressing capital raising and financial advisory needs of
public and private companies and high net worth individuals.
Headquartered in Los Angeles, CA
with offices in major financial markets throughout the United States, Australia and Europe, the firm consists of over 200
professionals whose cross-platform expertise is mobilized to
provide a myriad of financial solutions.
The Company operates through several wholly-owned subsidiaries,
including B. Riley & Co., LLC (B. RILEY), a FINRA-licensed
broker dealer; Great American Group, LLC (www.greatamerican.com),
provider of advisory and valuation services, asset disposition and
auction solutions, commercial lending, and real estate advisory
services; B. Riley Capital Management, LLC, (which includes B.
Riley Asset Management (www.brileyam.com), a SEC-registered
investment advisor providing investment products to institutional
and high net worth investors, and B. Riley Wealth Management, a
multi-family office practice and wealth management firm focused on
the needs of ultra-high net worth individuals and families
(www.brileywealth.com); Great American Capital Partners, a provider
of senior secured loans and second lien secured loan facilities to
middle market public and private U.S. companies and B. Riley
Principal Investments, a group that makes proprietary investments
in other businesses, such as the acquisition of United Online, Inc.
(www.untd.com) in July 2016.
Forward-Looking Statements
This press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact are forward-looking
statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause B.
Riley Financial's or FBR's performance or achievements to be
materially different from any expected future results, performance,
or achievements. Forward-looking statements speak only as of the
date they are made and neither B. Riley Financial nor FBR assume
any duty to update forward looking statements. We caution readers
that a number of important factors could cause actual results to
differ materially from those expressed in, or implied or projected
by, such forward-looking statements. Such forward-looking
statements include, but are not limited to, statements about the
benefits of the merger involving B. Riley Financial and FBR,
including future financial and operating results, the combined
company's plans, objectives, expectations and intentions and other
statements that are not historical facts. The following factors,
among others, could cause actual results to differ from those set
forth in the forward-looking statements: (i) the possibility that
the merger does not close when expected or at all because required
regulatory, stockholder or other approvals and other conditions to
closing are not received or satisfied on a timely basis or at all;
(ii) changes in B. Riley's share price before closing; (iii) lower
FBR earnings and/or higher FBR transaction and other expenses that
result in a shortfall in the funds available for distribution by
FBR in the special dividend; (iv) the risk that the benefits from
the transaction may not be fully realized or may take longer to
realize than expected, including as a result of changes in general
economic and market conditions, interest and exchange rates,
monetary policy, laws and regulations and their enforcement, and
the degree of competition in the geographic and business areas in
which B. Riley Financial and FBR operate; (v) the ability to
promptly and effectively integrate the businesses of B. Riley
Financial and FBR; (vi) the reaction to the transaction of the
companies' customers, employees and counterparties; (vii) diversion
of management time on merger-related issues; and (viii) other risks
that are described in B. Riley's and FBR's public filings with the
SEC. For more information, see the risk factors described in each
of B. Riley's and FBR's Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and other filings with the SEC.
No Offer or Solicitation
This press release does not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Additional Information about the Merger and Where to Find
It
Stockholders are urged to carefully review and consider
each of B. Riley Financial's and FBR's public filings with the SEC,
including but not limited to their Annual Reports on Form 10-K,
their proxy statements, their Current Reports on Form 8-K and their
Quarterly Reports on Form 10-Q. In connection with the proposed
transaction, B. Riley Financial will file with the SEC a
Registration Statement on Form S-4 that will include a Joint Proxy
Statement of B. Riley Financial and FBR and a Prospectus of B.
Riley Financial (the "Joint Proxy/Prospectus"), as well as other
relevant documents concerning the proposed transaction.
Stockholders of B. Riley Financial and FBR are urged to carefully
read the Registration Statement and the Joint Proxy/Prospectus
regarding the transaction in their entirety when they become
available and any other relevant documents filed with the SEC, as
well as any amendments or supplements to those documents, because
they will contain important information. A definitive Joint
Proxy/Prospectus will be sent to the stockholders of B. Riley
Financial and FBR. The Joint Proxy/Prospectus and other relevant
materials (when they become available) filed with the SEC may be
obtained free of charge at the SEC's Website at http://www.sec.gov.
FBR AND B. RILEY FINANCIAL STOCKHOLDERS ARE URGED TO READ THE JOINT
PROXY/PROSPECTUS AND THE OTHER RELEVANT MATERIALS BEFORE VOTING ON
THE TRANSACTION.
Investors will also be able to obtain these documents, free of
charge, from FBR by accessing FBR's website at www.fbr.com under
the tab "Investor Relations" or from B. Riley Financial at
www.brileyfin.com under the tab "Investor Relations." Copies can
also be obtained, free of charge, by directing a written request to
B. Riley Financial, Attention: Corporate Secretary, 21255 Burbank
Boulevard, Suite 400, Woodland Hills,
California 91367 or to FBR, Attention: Corporate Secretary,
1300 North Seventeenth Street, Arlington,
Virginia 22209.
Participants in Solicitation
B. Riley Financial and
FBR and their directors and executive officers and certain other
persons may be deemed to be participants in the solicitation of
proxies from the stockholders of FBR or B. Riley Financial in
connection with the merger. Information about the directors and
executive officers of B. Riley Financial and their ownership of B.
Riley Financial common stock is set forth in the proxy statement
for B. Riley Financial's 2016 annual meeting of stockholders, as
filed with the SEC on a Schedule 14A on April 19, 2016. Information about the directors
and executive officers of FBR and their ownership of FBR common
stock is set forth in the proxy statement for FBR's 2016 annual
meeting of shareholders, as filed with the SEC on a Schedule 14A on
May 9, 2016. Additional information
regarding the interests of those participants and other persons who
may be deemed participants in the transaction may be obtained by
reading the Joint Proxy/Prospectus regarding the merger when it
becomes available. Free copies of this document may be obtained as
described in the preceding paragraph.
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SOURCE B. Riley Financial, Inc.
