Piper Jaffray Companies Announces Significant Expansion of Asset Management With Addition of Advisory Research, Inc.
December 21 2009 - 8:00AM
Business Wire
Piper Jaffray Companies (NYSE:PJC) today announced a significant
expansion of its asset management business. The company signed a
definitive agreement to purchase Advisory Research, Inc., an asset
management firm with approximately $5.5 billion in assets under
management, which are mainly focused in equity strategies. Advisory
Research, Inc. is based in Chicago. The transaction is expected to
close in the first quarter of 2010 and is subject to customary
regulatory approvals and client consents.
Assuming the transaction occurred on Sept. 30, 2009, asset
management would have comprised approximately 12 percent of Piper
Jaffray total net revenues and 24 percent of pre-tax operating
income for the nine months ending Sept. 30, 2009. The transaction
is valued at $218 million, payable at closing, composed of $178
million in cash and $40 million of restricted stock. Employee
owners will receive approximately 40 percent of consideration in
restricted stock.
Brien O’Brien, chief executive officer of Advisory Research,
will join the Piper Jaffray senior leadership team and report to
Andrew Duff, chairman and CEO of Piper Jaffray. O’Brien will
continue to lead Advisory Research and Wiley Angell, CEO of FAMCO,
the current Piper Jaffray asset management business, will continue
to lead that organization. O’Brien will provide leadership to the
overall asset management business.
“Expanding our asset management business furthers our strategy
of building a diversified investment bank and improving our overall
pre-tax margin and return on shareholders’ equity,” said Duff.
“Advisory Research and FAMCO have complementary capabilities and
position us to better meet client needs in the long term. With the
addition of Advisory Research, asset management achieves sufficient
scale to support further organic development.”
“I am excited to join Piper Jaffray and continue to grow the
asset management business for the firm,” said O’Brien. “Our first
priority is to continue to provide our clients with the same
disciplined investment process and level of service on which they
have come to depend. Over time, we believe we can realize benefits
from a broader product set and distribution and the global
footprint of Piper Jaffray.”
“Advisory Research and FAMCO have a similar client-service and
risk-control orientation, aligning us in our approach to the
market,” said Angell. “We remain focused on serving our current
clients, and we believe we have an even stronger platform for
future growth.”
Advisory Research has 42 employees, including 19 investment
professionals, and FAMCO has 52 employees, including 23 investment
professionals. Locations will remain in Chicago and St. Louis.
Conference Call
Andrew S. Duff, chairman and chief executive officer, and Debbra
L. Schoneman, chief financial officer, will host a conference call
to discuss the transaction on Monday, Dec. 21, at 11 a.m. ET (10
a.m. CT). The call can be accessed via live audio webcast available
through the firm's Web site at www.piperjaffray.com or by dialing
(800) 925-4693 and referencing reservation #21450365. The
presentation used on the call can be accessed at
www.piperjaffray.com/advisoryresearch. Callers should dial in at
least 15 minutes early to receive instructions. A replay of the
conference call will be available beginning at approximately 1 p.m.
ET, (12 p.m. CT) at the same Web address or by calling (800)
633-8284 and referencing reservation #21450365.
About Piper Jaffray
Piper Jaffray Companies (NYSE:PJC) is a leading, international
middle market investment bank and institutional securities firm,
serving the needs of middle market corporations, private equity
groups, public entities, nonprofit clients and institutional
investors. Founded in 1895, Piper Jaffray provides a comprehensive
set of products and services, including equity and debt capital
markets products; public finance services; mergers and acquisitions
advisory services; structured products; equity and fixed-income
institutional brokerage; and equity research. Piper Jaffray
headquarters are located in Minneapolis, Minnesota, with offices
across the U.S. and in London, Hong Kong and Shanghai. Piper
Jaffray & Co. is the firm's principal operating subsidiary.
(www.piperjaffray.com)
Cautionary Note Regarding Forward-Looking Statements
This press release and the conference call to discuss the
contents of this press release contain forward-looking statements.
Statements that are not historical or current facts, including
statements about beliefs and expectations, are forward-looking
statements and are subject to significant risks and uncertainties
that are difficult to predict. These forward-looking statements
cover, among other things, the future prospects of Piper Jaffray
Companies and its asset management business and management’s
expectations regarding earnings accretion, pre-tax margin, return
on equity, the compensation ratio, assets under management, firm
capital levels, the scale necessary to support organic growth in
asset management, and the extent to which the combination will
mitigate volatility in Piper Jaffray’s overall business.
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 announced in this press release may not be
completed, or completed within the expected timeframe; (2)
financing for the transaction may be obtained on terms that are
less favorable that initially anticipated, increasing the cost of
the transaction; (3) 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;
(4) the expected benefits of the transaction, including
earnings accretion, margin improvement, return on equity
improvement, compensation ratio improvement, achieving scale
sufficient to support organic growth in asset management, and the
mitigation of volatility in Piper Jaffray’s overall business, may
take longer than anticipated to achieve and may not be achieved in
their entirety or at all; (5) revenues from the asset management
business may vary based on investment performance and market and
economic factors; (6) developments in market and economic
conditions have in the past adversely affected, and may in the
future adversely affect, the business and profitability of Piper
Jaffray; (7) Piper Jaffray may not be able to compete
successfully with other companies in the financial services
industry; 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, 2008 and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in Part II, Item 7 of our Annual Report on
Form 10-K for the year ended December 31, 2008, and updated in
our subsequent reports filed with the SEC (available at our Web
site at www.piperjaffray.com and at the SEC Web site at
www.sec.gov). Forward-looking statements speak only as of the date
they are made, and readers are cautioned not to place undue
reliance on them. We undertake no obligation to update them in
light of new information or future events.
© 2009 Piper Jaffray & Co., 800 Nicollet Mall, Suite 800,
Minneapolis, Minnesota 55402-7020
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