The latest bank/investment firm M&A came on Tuesday as Toronto-Dominion Bank TD bought Cowen Inc COWN in an all cash deal valued at $1.3 billion or $39 per share, according to a TD Bank Group press release. TD believes that “through this transaction, TD Securities will accelerate its long-term growth strategy in the United States by acquiring a high-quality and rapidly growing investment bank with outstanding talent and highly complementary products and services.”
TD Bank Group President and CEO Bharat Masrani shared: "Cowen is a leading independent dealer with a premier U.S. equities business and a strong, diversified investment bank that, when combined with TD Securities, will allow us to accelerate our strategic U.S. growth plans… Most importantly, the acquisition will provide new capabilities and increased depth in key business lines to meet our clients' needs and will allow us to leverage our combined expertise, talent, and integrated offerings across a much larger client base."
To help pay for the acquisition, TD sold some of its holdings in Charles Schwab Corporation SCHW sending the stock down 2.15% during Tuesday’s trading session.
The announced acquisition has many investors wondering which investment bank or brokers could be acquired next. Therefore, Benzinga created the following list of banks and financial groups based on market capitalization similar to Cowen’s market cap of $1.065 billion. Note: All of the following ideas are speculation, none are confirmed.
Lazard Ltd LAZ: Lazard’s revenue is nearly equally split between financial advisory, such as acquisition and restructuring advisory, and asset management. The company's asset management business is primarily equities (over 80% of assets under management), has an international focus, and is geared toward institutional clients. The company has a market capitalization of $3.737 billion.
Moelis & Co MC: Moelis & Co is an independent investment bank that provides unconflicted strategic advice to a diverse client base. The firm's objective is to offer a range of advisory services with expertise across all major industries in mergers and acquisitions, recapitalizations and restructurings, and other corporate finance matters. The firm has a market capitalization of $3.135 billion.
Evercore Inc EVR: Evercore is an independent investment bank that derives the majority of its revenue from financial advisory, including merger, acquisition, and restructuring advisory. It also has institutional equities and investment management businesses that account for around 20% of net revenue. The firm has a market capitalization of $4.031 billion.
Cohen & Steers Inc. CNS: Cohen & Steers is a niche asset manager concentrating on real estate securities. The firm invests mainly in the equity shares of real estate investment trusts, with holdings in domestic and international real estate securities accounting for close to two thirds of its $87.9 billion in managed assets at the end of June 2022. Cohen & Steers also manages portfolios dedicated to preferred securities, utilities stocks, and other high-yield offerings. It expects to balance distribution among its closed-end mutual funds, open-end mutual funds, and institutional accounts over time. The firm has a market capitalization of $3.602 billion.
Stifel Financial Corp SF: Stifel Financial is a middle-market-focused investment bank that produces more than 90% of its revenue in the United States. Approximately 65% of the company's net revenue is derived from its global wealth management division, which supports over 2,000 financial advisors, with the remainder coming from its institutional securities business. Stifel has a history of being an active acquirer of other financial service firms. The firm has a market capitalization of $6.303 billion.
Overall, Tuesday’s M&A between TD and Cowen will have a substantial impact on TD’s financials. Bank executives believe that revenues will start to increase almost immediately after the deal is approved by regulators. The deal will also boost TD’s American market share, since Cowen is a primarily American firm with a large clientele.
Price Action: Cowen's stock is up 7.95% with the price hovering at $38.30 at the time of publication. Toronto-Dominion Bank shares down 0.14% at the price at $64.43, according to Benzinga Pro.
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