B. Riley Financial, a financial services firm, announced Wednesday that it is acquiring FBR & Co., an investment banking and brokerage firm, in a deal that values FBR at $160.1 million.
The deal is a stock-for-stock merger agreement, under which 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, the companies said.
Additionally, FBR is required to deliver a minimum of $33.5 million of cash to B. Riley Financial at the closing of the deal.
Under the terms of the deal, FBR’s chairman and CEO, Richard Hendrix, will take over as CEO of the combined investment banking and brokerage businesses, which operate as a subsidiary of B. Riley Financial.
Readers of HousingWire will be familiar with FBR, as the company’s financial analysis is often featured on the site.
According to the companies, FBR's banking and brokerage businesses “strategically align” with B. Riley's current operations thanks to a limited overlap of clients, coverage and capital raising activities.
The companies said that the deal “further diversifies” the business of B. Riley Financial and adds FBR’s “market leading initial equity franchise” to B. Riley’s operations.
“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,” the companies noted in a release.
Additionally, the companies noted that the deal will allow for expanded geographic reach with significant operations on both the East and West coasts.
“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,” Riley continued. “The combined firm will enjoy an increased capital base as well as meaningful revenue and expense synergies.”
Hendrix also noted the upside the deal brings for both companies.
“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,” Hendrix said.
“Our organizations are fueled by employees who are highly knowledgeable and have an in-depth understanding of their clients and industries,” Hendrix added. “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.”
The companies said that the deal is expected to close during the second quarter of 2017.