Bank Cuts Deal To Buy Brokerage U.S. Bancorp Will Acquire Piper Jaffray For $730 Million
U.S. Bancorp on Monday agreed to buy investment company Piper Jaffray Companies Inc. for $730 million, ending months of speculation that started shortly after Piper finished cleaning up the fallout from a disastrous derivatives-based investing strategy.
News of the purchase sent Piper’s stock up 22 percent on the New York Stock Exchange Monday, while U.S. Bancorp rose slightly.
The century-old investment banking and brokerage concern had been mentioned as a candidate for acquisition for several months.
The U.S. Bancorp-Piper deal is the latest in a series of bankbrokerage combinations as companies from different wings of the financial services industry seek alliances to get more customers, cut costs and compete more effectively.
The deal will enable U.S. Bancorp to offer investment banking and brokerage services through a new subsidiary, which it will call U.S. Bancorp Piper Jaffray Inc. Both companies are based in Minneapolis.
That proximity has already created some familiarity between the two organizations, said Piper Jaffray’s managing director in Spokane, Tim Chernevak, who added that the announcement did not come as a surprise.
“Consolidation in the financial services industry was to be, and is to be expected,” he said.
U.S. Bancorp is the nation’s 15th-largest bank with $70 billion in assets; the new company will rank as the 11th-largest retail brokerage in the United States.
The companies said there will be minimal job losses, mainly in administrative functions.
Piper Jaffray employs 15 brokers in Spokane, Chernevak said.
He said he would not know much about a possible consolidation of the firm’s offices in the Seafirst Financial Center with U.S. Bancorp’s until a meeting in Seattle Monday afternoon.
Piper Jaffray also has offices in Yakima, Wenatchee, Chelan and the Tri-Cities.
U.S. Bancorp will pay $37.25 per common share of Piper Jaffray stock, a 25 percent premium over Piper’s closing price of $29.75 Friday. Piper on Monday rose $6.62-1/2 to $36.37-1/2 on the New York Stock Exchange, while U.S. Bancorp rose $1.75 to $115 per share.
U.S. Bancorp itself is the product of a merger that combined First Bank System of Minneapolis with U.S. Bancorp, formerly based in Portland. It operates about 1,000 banking offices in 17 states from the Midwest to the West Coast.
Piper Jaffray Companies is the parent of Piper Jaffray Inc., an investment company with 89 retail sales offices in 19 Midwestern and Western states and capital markets offices in 18 cities.
, DataTimes