Piper Jaffray Cos. acquired Simmons & Co. International, an investment bank specializing in the energy industry, for $139 million in cash and stock.
The deal, announced Tuesday, is the latest step by Minneapolis-based Piper Jaffray to expand its deal-making and capital-raising capabilities in several industries. Earlier this year, the company made several acquisitions to boost such services to the banking industry.
“We’ve been interested in energy for years,” Chairman and CEO Andrew Duff told the Star Tribune. “It’s clearly a cyclical business. Part of what’s attractive to us is it tends to be uncorrelated with our other industry verticals.”
Simmons had revenue of $96 million in its most recent fiscal year, which ended June 30.
Piper Jaffray said it will pay for the deal with $91 million in cash and $48 million in restricted stock. The company set aside $21 million in cash and stock to retain Simmons bankers.
The firm will use future stock repurchases to offset the dilution to current shareholders from shares that are being issued as a result of the transaction. Piper shares fell 3.7 percent on Tuesday to close at $34.53.
The deal is expected to close early next year and add to the company’s 2016 profit, Piper Jaffray said.
In October, Piper Jaffray completed its purchase of BMO Capital Markets GKST Inc., which was responsible for BMO Financial Group’s municipal bond sales, trading and originations. The purchase followed Piper Jaffray’s acquisition of River Branch Holdings, a boutique investment firm in Chicago.
During the last year, Piper Jaffray also hired five veteran investment bankers from Sterne Agee with experience in the financial services sector and added eight research analysts.
“As we get these [acquisitions] successfully integrated and start accomplishing some of the synergies by the complementary products for their clients and our clients, we’re well on our way in a year or two to being a $500 million investment banking franchise,” Duff said.