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Investment bank Simmons & Co. International, with more than $9 billion in deals and equity offerings so far in 2015, is finally on the other side of a transaction.
Investment bank and asset manager Piper Jaffray Cos. (PJC) said Nov. 17 it acquired Simmons for $139 million. The price tag includes $91 million cash, $48 million stock and money for incentives.
Simmons is one of the largest and most experienced independent investment banks specializing in the energy industry, offering M&A advisory, capital markets execution and investment research. Its coverage includes energy services and equipment, E&P, midstream and downstream.
Simmons generated revenue of $96 million, including $65 million in advisory revenue, in its most recent fiscal year ended June 30.
Reflecting the value of the talent at Simmons, PJC also paid $21 million in cash and stock to retain employees. The restricted stock included in the total consideration includes non-compete and non-solicitation agreements.
PJC will operate the business under the Simmons brand as a PJC company and it will continue running its energy practice from Simmons’ Houston and Aberdeen, Scotland, locations.
Subject to regulatory approval and customary closing conditions, the transaction is scheduled to close in the first quarter of 2016. The transaction is expected to be accretive to PJC’s non-GAAP earnings during the first full year of operation.
PJC said additional compensation may be available to certain individuals subject to beating revenue benchmarks during the first three years that Simmons is a part of PJC.
Key Simmons professionals have entered into employment agreements with PJC that become effective concurrent with the transaction’s close.
The business will be integrated into PJC’s equities and investment banking group, with senior leaders at the firm assuming senior leadership roles with PJC.
Fred Charlton will be appointed chairman of energy investment banking and will be co-head of energy investment banking together with James Baker.
Bill Herbert will become head of global energy research while Will Britt will continue leading specialized energy equity sales.
Ira Green will become head of energy capital markets.
Colin Welsh will become head of international energy investment banking and executive chairman of PJC’s U.K. subsidiary, and continue leading Simmons’ international activities.
Michael Frazier, Simmons’ chairman, president and CEO, entered into a consulting agreement with PJC and will continue serving in a senior role that leverages his relationship and experience.
“This is a milestone transaction as we meaningfully increase the firm’s investment banking footprint. Expanding into the energy sector has been a long-term goal for us and we are pleased to have found the ideal partner to fulfill this strategy,” said Scott LaRue, global co-head of PJC investment banking. “We look forward to combining our broader product suite with Simmons’ sector expertise, unmatched reputation and extensive relationships to build on the firm’s long history of success.”
Contact the author, Darren Barbee, at dbarbee@hartenergy.com
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