The Legg Mason Capital Markets business includes investment banking, equity and fixed income research, equity sales and trading, structured finance and taxable fixed income sales and trading departments of Legg Mason.
According to Stifel, it will pay Citigroup an amount equal to the net book value of assets being acquired, primarily fixed assets and securities inventories, plus a premium of $7 million. The agreement also provides for a potential additional payment by Stifel to Citigroup of up to $30 million, an “earn-out” payment based on the performance of the combined capital markets business of Stifel for fiscal years 2006, 2007 and 2008.
The transaction is expected to close in the fourth quarter, at which time the entire management team and other key associates of LM Capital Markets will join Stifel. Legg Mason Capital Markets’ 525 associates will remain at their present locations and will become the core of the Capital Market Division of Stifel Nicolaus.
Once combined, the firm will have some 1,840 associates in 117 offices in the
“The combination of Stifel Nicolaus and LM Capital Markets makes tremendous sense strategically, financially and from a client service standpoint,” stated Ronald J. Kruszewski, chairman and CEO of Stifel Financial Corp. and Stifel, Nicolaus & Co. “Not only will we nearly double our size and increase our footprint, but we will greatly enhance our capabilities.”