In a twist to all the industry talk of oil and gas companies merging and acquiring one another, an energy-focused investment bank has been scooped up by a larger capital group.
Houston-based Simmons & Company International has accepted Piper Jaffray Cos’ $139 million offering, with $91 million in cash and $48 million in restricted stock. The firm will pay out another $21 million in staff incentives.
Piper CEO Andrew Duff said in a Nov. 17 conference call that energy remains a dynamic market despite the current downturn. The deal is expected to close in the first quarter of 2016, and will be Piper’s first foray into energy investing. In recent years, the firm has committed to a goal of $500 million in annual investment banking revenue.
“We recognize that we’re stepping into a difficult part of the cycle, but the long-term prospects and fit is very appealing to us,” he said.
Simmons has 170 investment banking, sales and trading, equity research and private equity professionals. Some key Simmons experts have entered into employment agreements that become effective with the transaction’s close.
Simmons CEO Michael Frazier said in a note to investors the deal won’t impact its regular operations because Piper Jaffray doesn’t have a presence in the energy space. As part of the deal, Simmons will maintain its brand name and operate as a relatively autonomous group.
“This transaction is a logical step in taking our firm to the next level as we expect our entire investment banking and equities groups to transition to Piper Jaffray in a seamless manner,” he said.
In the last fiscal year ending in June, Simmons’ revenue reached $96 million. In its 41 years, Simmons has executed more than 830 strategic advisory transactions and more than 330 private and public financings. Piper’s current investment banking team generated $300 million in revenue, Duff said.
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