Shares of Stifel Financial Corp. (SF) slid 2.06% in the trading session on Friday, after it entered into an agreement to acquire De La Rosa & Co. on Thursday. Even though the acquisition is expected to reinforce Stifel’s underwriting business in California, investors’ sentiment was negative, primarily due to the sluggishly recovering Californian economy.
The acquisition is expected to be completed in the first quarter of 2014. However, financial details weren’t divulged by either company. Immediately following the completion, the employees of De La Rosa will be integrated into the Stifel team.
Founded in 1989, De La Rosa & Co. has transformed into one of the principal investment banking firms serving the California public finance market. Stifel’s acquisition of this investment banking firm deepens its Californian commitment that was first noticed after it acquired Stone & Youngberg in 2011.
For De La Rosa, the integration with Stifel will give its clients a wider range of investment banking products. Stifel’s expertise will also help De La Rosa to enhance its existing offerings.
We note that the acquisition will increase Stifel’s share in the Californian market, which is projected to grow in the latter part of 2014 and continue into 2015, according to the Business Forecasting Center at the University of the Pacific. Additionally, the deal will drive Stifel’s revenue growth.
Stifel Financial currently carries a Zacks Rank #2 (Buy). Other investment brokerage firms worth considering include Investment Technology Group Inc. (ITG) and LPL Financial Holdings Inc. (LPLA), both carrying a Zacks Rank #1 (Strong Buy). Another stock KCG Holdings, Inc. (KCG) with the same Zacks Rank as Stifel is also worth a look.
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