Ryan Beck’s Discount Price?
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Ryan Beck’s sale to Midwest regional Stifel Financial is causing mixed reactions from industry observers and analysts alike.
BankAtlantic Bancorp announced the New Jersey-based brokerage firm sale this week in a deal worth $91 million in stock plus earn-out payments. The two contingent earn-outs are based on Ryan Beck’s private client and investment-banking revenue.
Assuming Ryan Beck’s private client group reaches its 2006 revenue annually, the earn-out would be about $20 million over the two years following the close. The other earn-out payment is equal to 25 percent of the investment-banking fees in excess of $25 million for each of the next two years. But Laurie Hunsicker, analyst at Friedman Billings Ramsey, says that part of the deal probably “won’t pan out.” She adds, “For the last four quarters ended Sept. 30, 2006, investment banking has contributed just shy of $14 million.”
Hunsicker, whose firm projected in October that a sale would be worth anywhere between $90 million and $100 million, says all sides seem to have received a fair deal. But some say the sale price is disappointing.
Jennifer Thompson, analyst at Oppenheimer & Co., says the pricing equals “about 1.5 times book value, lower than comparable deal averages and lower than the 2.0 to 2.5 times book value we had estimated the division was worth.”
Also worth noting, the deal moved the firms’ stocks in directions contrary to what is usual in these types of deals. Stifel saw a 13 percent increase to its stock the day of the announcement, closing at $43.27 per share. BankAtlantic, on the other hand, dropped 4 percent, to $12.98 per share. Hunsicker says the stock prices could be the result of earlier speculation by some that Ryan Beck would sell for a higher price. The actual price may have lead Wall Street to see Stifel getting a great deal on Ryan Beck.
