Stifel Gains on Legg Mason Unit Purchase News - Analyst Blog

Shares of Stifel Financial Corp. SF gained around 1.7% following the company's announcement to acquire Legg Mason Investment Counsel & Trust Co. (LMIC) – a unit of Legg Mason Inc. LM. The deal is expected to close in fall 2014.

Though financial terms and conditions of the deal are not disclosed yet, Stifel will add LMIC in its Global Wealth management segment. This is because LMIC is engaged in providing investment advisory and trust services to retail as well as institutional clients and currently has more than $9 billion in assets under management.

A Win-Win Situation?

The latest move by the brokerage firm seems to be in line with its expansion strategy. The company is on an acquisition spree as evident from its actions over the past couple of months.

Notably, the latest acquisition follows the deal inked by Stifel in May to buy London-based stock broking and investment banking firm Oriel Securities. Further, in January, Stifel penned an agreement to buy California-based public finance investment banking boutique – De La Rosa & Co.  Owing to this deal the company expects to be a significant player in the key underwriting markets in California.

On Legg Mason's part, management believes that LMIC is no longer a strategic fit and the company aims to focus more on core affiliates that can be capitalized more efficiently via its global distribution platform.

Legg Mason's stock price also rallied 2% on this news, reflecting investors' positive sentiment.

Though nothing conclusive can be said, it seems that Stifel and Legg Mason struck a strategic deal that could reward both the companies.

Currently, both Stifel and Legg Mason carry a Zacks Rank # 3 (Hold). Some other stocks in the finance sector worth considering include Cohen & Steers Inc. CNS and Woori Finance Holdings Co., Ltd. WF. Both the stocks carry a Zacks Rank #1 (Strong Buy).