In a cash-and-stock deal worth more than $575 million, Stifel Financial Corp.(SF) agreed to buy ()Keefe, Bruyette & Woods (KBW) to expand presence in the financial-services sector.

KBW shareholders will receive $17.50 per share, with $10 per share in cash and $7.50 per share in Stifel common stock, a 7.4% premium over KBW’s Friday closing price.

The combined company will provide sales and trading, research in financial services and investment banking. KBW’s Keefe, Bruyette & Woods broker-dealer subsidiary will remain independent of Stifel.

Results from September earnings show that net revenues for Stifel and KBW were $1.8 billion. KBW’s excess capital of $250 million will be available to Stifel upon closing.

Stifel CEO Ronald J. Kruszewskisaid in a  statement the transaction would be accretive to shareholder value.

“This merger with KBW, a premier, specialized financial services firm, provides Stifel with an exciting opportunity to grow and become a market leader in the financial services sector,” he said.

Kruszewski added, “Our shared culture and platforms are highly complementary, and this combination expands our capabilities at a time when we believe the financial services sector is poised to benefit from improving fundamentals.” 

Stifel reported 3Q12 earnings increase of 69% as principal transactions revenue increased 34%.