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 
ST. LOUIS, MO and NEW YORK, NY -- (Marketwire) -- 11/05/12 --  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 e
xpectations 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.  
Investor Relations Contacts
Stifel Financial 
Sarah Anderson
415-364-2500 
investorrelations@stifel.com  
KBW Investor Relations
Alan Oshiki
866-529-2339  
KBW Media
Intermarket Communications
Mike Gelormino
212-909-4780 
 
 
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