INTL FCStone to Acquire Sterne Agee Securities’ Units Bringing $11b in Assets

INTL FCStone to buy Stern Agee eyeing 50 clearing relationships and 100,000 clients.

A definitive agreement has been signed by New York-headquarted financial services provider INTL FCStone Inc (NASDAQ:INTL) to acquire the correspondent securities clearing business and wealth management business from Sterne Agee, according to an official company announcement.

The deal will be priced based on the tangible net asset value of the combined businesses, with ITNL FCStone projecting that the acquisition will produce a non-material loss within the first year after acquisition but should be accretive in the following year.

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In addition, the acquisition of Sterne Agee will help INTL FCStone expand its range of offerings across securities segments related to execution and clearing, among other products, and bring in 50 clearing relationships, over 100,000 clients, and $11 billion in assets.

 

This acquisition brings $11 billion in client assets, over 100,000 accounts and 50 correspondent clearing relationships to INTL.

 

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Stifel Financial Corp subsidiary

Sterne Agee is a wholly-owned subsidiary of Stifel Financial Corp, and the deal will involve the purchase of three broker-dealer entities and two registered investment advisers, and with closing subject to regulatory approval among other limited conditions.

Sterne Agee has 160 staff across the related businesses being acquired, including people in Alabama, North Caroline and Ohio, with INTL planning on retaining the current management and staff.

Industry Consolidation focus

Commenting in an official statement, INTL FCStone CEO Sean O’Connor said: “This acquisition fulfills a strategic objective allowing us to clear securities for our customers. We believe that the securities industry has rapidly consolidated, providing an opportunity for a well-capitalized, credible mid-market clearer.”

Mr. O’Connor further opined: “This acquisition will allow us to provide execution, market intelligence and post-trade clearing across almost all asset classes in almost every market.”

Over 50 clearing relationships

Charles Lyon Source: LinkedIn
Charles Lyon
Source: LinkedIn

Providing clearing of securities, whether on a direct basis or as a correspondent, enables firms that provide execution agreements to also offer clearing agreements. This would help INTL FCStone provide existing and prospective clients the available clearing-related services, in addition to the clients of the businesses being acquired, if the deal closes.

Charles Lyon, head of INTL FCStone’s Securities Division, added in the statement: “This acquisition brings $11 billion in client assets, over 100,000 accounts and 50 correspondent clearing relationships to INTL.”

Mr. Lyon concluded: “The Sterne Agee clearing business is a well-respected franchise that provides us with a strong platform to grow our clearing and related securities activities.  The independent wealth management business provides us with an excellent foothold in a segment of retail wealth management that is growing and should lead to additional opportunities in that space.”

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