Piper Jaffray to Acquire Simmons for Energy Dealmaking Push

  • Deal adds more than 170 professionals as CEO Duff builds firm
  • Simmons CEO Frazier to be consultant to Piper Jaffray

Piper Jaffray Cos., the investment bank founded in 1895, agreed to buy Simmons & Co. for dealmaking in the energy industry.

Piper Jaffray will add more than 170 professionals offering merger-and-acquisition advice, equity research and sales and trading, the Minneapolis-based company said Tuesday in a statement. The buyer will pay $139 million, with $91 million in cash and the rest in restricted stock, according to the statement. Piper Jaffray committed an additional $21 million to retain staff.

“Energy continues to be a dynamic and growing market,” Chief Executive Officer Andrew S. Duff said in a conference call Tuesday. “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.”

Duff has been building capital-markets operations by buying businesses and adding talent. He announced a deal in July to acquire Bank of Montreal’s GKST Inc. to expand in municipal bond sales and in June added a group of dealmakers from Sterne Agee Group.

Smaller investment banks have been preparing for work in the energy sector as low oil prices pressure companies and disrupt the industry. Moelis & Co. has been building its staff for energy transactions, hiring David Cunningham from Tudor Pickering Holt & Co. and Barclays Plc’s Christopher Shaw.

Piper Jaffray slipped 2.8 percent to $34.84 at 11:30 a.m. in New York, extending the decline this year to 40 percent. In 2014, the company gained 47 percent.

Frazier, Charlton

Simmons CEO Michael Frazier will serve as a consultant to Piper Jaffray, while Fred Charlton will become co-head of energy investment banking with James Baker. Staff from the target company will continue to work from Simmons locations in Houston and Aberdeen, Scotland.

Selling to Piper Jaffray will give Simmons access to products and services such as restructuring, debt and capital markets advisory that will enable the business to gain market share as energy mergers and acquisitions pick up, Charlton said in an interview.

“There was no energy group over at Piper, and that was a critical element in selecting them" as the buyer, Charlton said, adding that all 20 to 25 of Simmons’s managing directors have agreed to stay on.

‘Accomplished Firm’

Simmons, founded in 1974, advised Texas oil pump maker Lufkin Industries Inc. on its more than $3 billion sale to General Electric Co. in 2013, and has worked on about $260 billion worth of transactions. Simmons also manages two private-equity funds in the U.K. that specialize in energy, according to the statement.

“Simmons is the preeminent firm in energy investment banking and we are proud to have the opportunity to partner with such an accomplished team,” Duff said in the statement. “This addition represents a major step in our drive towards $500 million in annual investment banking revenue.”

Norton Rose Fulbright US LLP and Burness Paull LLP served as legal advisers to Simmons while Berkshire Capital Securities gave financial advice. Piper Jaffray was advised by Faegre Baker Daniels LLP. The deal is expected to be completed in the first quarter of next year, according to the statement.

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