Stifel Financial and KBW Announce Strategic Merger

  Stifel Financial and KBW Announce Strategic Merger

Creating a Leading Financial Services Specialized Practice Within the Premier
                        Middle-Market Investment Bank

Business Wire

ST. LOUIS & NEW YORK -- November 05, 2012

Stifel Financial Corp. (NYSE: SF) and KBW, Inc. (NYSE: KBW) today announced
that they have entered into a definitive merger agreement to create the
premier middle-market investment bank with a specialized focus on the
financial services industry.

Under the terms of the agreement, which was unanimously approved by the boards
of directors of both companies, KBW shareholders will receive $17.50 per
share, comprised of $10.00 per share in cash and $7.50 per share in Stifel
common stock. Additionally, holders of certain restricted KBW shares, that
will continue to vest post closing, will receive $17.50 in Stifel common
stock. The stock component of the consideration is fixed at $7.50 per share,
subject to a collar, provided that the volume weighted average closing price
of Stifel common stock for the ten days prior to closing is between $29.00 and
$35.00 per share.If the volume weighted average price rises above $35.00 per
share, the exchange ratio will be fixed at 0.2143 shares of Stifel common
stock for each share of KBW, and if it falls below $29.00 per share, the
exchange ratio will be fixed at 0.2586 shares of Stifel common stock for each
share of KBW.

The transaction is valued in excess of $575 million, which includes the
outstanding shares and restricted stock awards of KBW.Approximately $250
million in excess capital on KBW’s balance sheet is expected to be immediately
available to Stifel upon closing.

Ronald J. Kruszewski, Chairman, President and CEO of Stifel Financial Corp.
said, “This transaction is expected to be accretive to shareholder value. This
merger with KBW, a premier, specialized financial services firm, provides
Stifel with an exciting opportunity to grow and become a market leader in the
financial services sector. Our shared culture and platforms are highly
complementary, and this combination expands our capabilities at a time when we
believe the financial services sector is poised to benefit from improving
fundamentals. I am confident our clients will benefit from our expanded
services and expertise.”

Thomas B. Michaud, President and CEO of KBW, said, “This merger will allow KBW
to focus on its strengths in the financial services sector while offering
clients a greatly expanded array of products and services through the Stifel
platform. KBW’s deep roster of client relationships will be supported by a
strong institutional business and global wealth management business. With
little overlap, this merger will provide a significant opportunity to grow our
combined companies' market share.”

The combined company will provide investment banking, sales and trading, and
research in the financial services vertical through KBW’s Keefe, Bruyette &
Woods broker-dealer subsidiary, which will continue to operate as an
independent subsidiary of Stifel following completion of the transaction.
Stifel will utilize KBW’s preeminent market brand as a highly focused,
specialized financial services platform of choice.

Stifel has identified significant synergies that will leverage the integrated
platforms and take advantage of Stifel’s robust global wealth management
capabilities. Annualized net revenues for the two companies are approximately
$1.8 billion, based upon 2012 results through September 30, 2012.

The merger is subject to approval by KBW shareholders and customary regulatory
approvals. Thomas Michaud will join Stifel’s board and management team upon
completion of the merger and will remain Chief Executive Officer of the KBW
business unit.

Stifel was advised by its own wholly owned subsidiary, Stifel, Nicolaus &
Company, Incorporated and was represented by Bryan Cave LLP. Stephens Inc.
rendered a fairness opinion to the board of directors of Stifel Financial
Corp. KBW was advised by its own wholly owned subsidiary, Keefe, Bruyette &
Woods, Inc., and BofA Merrill Lynch, and was represented by Sullivan &
Cromwell LLP.

Conference Call Information/ Earnings Announcement

Stifel and KBW will host a joint conference call today, November 5, at 8:30
a.m. (Eastern).

All interested parties are invited to listen to Stifel’s Chairman, President
and CEO, Ronald J. Kruszewski, and KBW’s CEO and President, Thomas B. Michaud,
by dialing (800) 651-2240 and referencing conference ID #64728788.

Also today, November 5, Stifel will issue its financial results for the third
quarter ended Sept. 30, before the market opens. Stifel will review the
results during the same conference call today, at 8:30 a.m. (Eastern).

A live audio webcast of the call, as well as a presentation highlighting the
Company’s results, will be available through the Company's website,
www.stifel.com. For those who cannot listen to the live broadcast, a replay of
the broadcast will be available through the above-referenced website beginning
approximately one hour following the completion of the call.

Company Information

Stifel Financial Corp. (NYSE: SF) is a financial services holding company
headquartered in St. Louis, which conducts its banking, securities, and
financial services business through several wholly owned subsidiaries. Stifel
clients are served through Stifel, Nicolaus & Company, Incorporated in the
U.S., through Stifel Nicolaus Canada Inc. in Canada, and through Stifel
Nicolaus Europe Limited in the United Kingdom and Europe. The Company’s
broker-dealer affiliates provide securities brokerage, investment banking,
trading, investment advisory, and related financial services to individual
investors, professional money managers, businesses, and municipalities. Stifel
Bank & Trust offers a full range of consumer and commercial lending solutions.
Stifel Trust Company, N.A. offers trust and related services. To learn more
about Stifel Financial, please visit the Company’s website at www.stifel.com.

KBW, Inc., headquartered in New York, operates in the U.S., Europe and Asia
through its broker dealer subsidiaries, Keefe, Bruyette & Woods, Inc., Keefe,
Bruyette & Woods Limited and Keefe, Bruyette & Woods Asia Limited. Celebrating
its 50th anniversary, KBW has established itself as a leading independent
authority in the banking, insurance, brokerage, asset management, mortgage
banking, real estate and specialty finance sectors. Founded in 1962, the firm
maintains industry-leading positions in the areas of research, corporate
finance, mergers and acquisitions as well as sales and trading in equities and
debt securities of financial services companies.

Cautionary Note Regarding Forward-Looking Statements

Statements in this presentation that relate to the future plans, events,
expectations, performance, objectives and the like of Stifel Financial Corp.,
as well as Stifel, Nicolaus and Company, Inc. and its other subsidiaries
(collectively, “Stifel” or the “Company”) and KBW, Inc. (“KBW”), may
constitute “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Future events, risks and uncertainties, individually or in the
aggregate, could cause our actual results to differ materially from those
expressed or implied in these forward-looking statements.

The material factors and assumptions that could cause actual results to differ
materially from current expectations include, without limitation, the
following: (1) the inability to close the merger in a timely manner; (2) the
inability to complete the merger due to the failure to obtain stockholder
approval and adoption of the merger agreement and approval of the merger or
the failure to satisfy other conditions to completion of the merger, including
required regulatory and other approvals; (3) the failure of the transaction to
close for any other reason; (4) the possibility that the integration of KBW’s
business and operations with those of Stifel may be more difficult and/or take
longer than anticipated, may be more costly than anticipated and may have
unanticipated adverse results relating to KBW’s or Stifel’s existing
businesses; (5) the challenges of integrating and retaining key employees; (6)
the effect of the announcement of the transaction on Stifel’s, KBW’s or the
combined company’s respective business relationships, operating results and
business generally; (7) the possibility that the anticipated synergies and
cost savings of the merger will not be realized, or will not be realized
within the expected time period; (8) the possibility that the merger may be
more expensive to complete than anticipated, including as a result of
unexpected factors or events; (9) the challenges of maintaining and increasing
revenues on a combined company basis following the close of the merger; (10)
diversion of management’s attention from ongoing business operations and
opportunities; (11) general competitive, economic, political and market
conditions and fluctuations; (12) actions taken or conditions imposed by the
United States and foreign governments; (13) adverse outcomes of pending or
threatened litigation or government investigations; (14) the impact of
competition in the industries and in the specific markets in which Stifel and
KBW, respectively, operate; and (15) other factors that may affect future
results of the combined company described in the section entitled “Risk
Factors” in the proxy statement/prospectus to be mailed to KBW’s shareholders
and in Stifel’s and KBW’s respective filings with the U.S. Securities and
Exchange Commission (“SEC”) that are available on the SEC’s web site located
at www.sec.gov, including the sections entitled “Risk Factors” in Stifel’s
Form 10-K for the fiscal year ended December 31, 2011, and “Risk Factors” in
KBW’s Form 10-K for the fiscal year ended December 31, 2011. Readers are
strongly urged to read the full cautionary statements contained in those
materials. We assume no obligation to update any forward-looking statements to
reflect events that occur or circumstances that exist after the date on which
they were made.

Additional Information

In connection with the proposed merger, Stifel will be filing a registration
statement on Form S-4 that will include a proxy statement of KBW that also
constitutes a prospectus of Stifel and other relevant documents relating to
the merger with the Securities and Exchange Commission (the “SEC”). Stifel and
KBW shareholders are urged to read the registration statement and any other
relevant documents filed with the SEC, including the proxy
statement/prospectus that will be part of the registration statement, because
they will contain important information about Stifel, KBW and the proposed
transaction. The final proxy statement/prospectus will be mailed to
shareholders of KBW. Investors and security holders will be able to obtain
free copies of the registration statement and proxy statement/prospectus (when
available) as well as other filed documents containing information about
Stifel and KBW, without charge, at the SEC’s website (www.sec.gov). Free
copies of Stifel’s SEC filings are also available on Stifel’s website
(www.stifel.com), and free copies of KBW’s SEC filings are available on KBW’s
website (www.kbw.com). Free copies of Stifel’s filings also may be obtained by
directing a request to Stifel’s Investor Relations by phone to (314) 342-2000
or in writing to Stifel Financial Corp., Attention: Investor Relations, 501
North Broadway, St. Louis, Missouri 63102. Free copies of KBW’s filings also
may be obtained by directing a request to KBW’S Investor Relations by phone to
415-364-2500, in writing to KBW, Inc., Attn: Alan Oshiki, c/o King Worldwide
Investor Relations, 48 Wall Street, 32nd Floor, New York, New York 10005, or
by email to kbw.inv.relations@kbw.com.

This communication shall not constitute an offer to sell or the solicitation
of an offer to buy securities, nor shall there be any sale of securities in
any jurisdiction in which such solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of such jurisdiction.

Proxy Solicitation

Stifel, KBW and their respective directors and executive officers may be
deemed, under SEC rules, to be participants in the solicitation of proxies
from the shareholders of KBW with respect to the proposed transaction. More
detailed information regarding the identity of the potential participants, and
their direct or indirect interests, by securities holdings or otherwise, will
be set forth in the registration statement and proxy statement/prospectus and
other materials to be filed with the SEC in connection with the proposed
transaction. Information regarding Stifel’s directors and executive officers
is also available in Stifel’s definitive proxy statement for its 2012 Annual
Meeting of Shareholders filed with the SEC on April 20, 2012. Information
regarding KBW’s directors and executive officers is also available in KBW’s
definitive proxy statement for its 2012 Annual Meeting of Shareholders filed
with the SEC on April 27, 2012. These documents are available free of charge
at the SEC’s web site at www.sec.gov and from Investor Relations at KBW and
Stifel Financial.

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Contact:

Investor Relations
Stifel Financial
Sarah Anderson, 415-364-2500
investorrelations@stifel.com
or
KBW Investor Relations
Alan Oshiki, 866-529-2339
or
KBW Media
Intermarket Communications
Mike Gelormino, 212-909-4780
 
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