B. Riley Financial Inc., a Los Angeles-based investment banking and financial advisory firm that serves smaller companies, is buying the similarly focused Arlington, Va.-based FBR & Co. for about $160.1 million in cash and stock.
Under terms of the deal, FBR shareholders will receive 0.671 B. Riley shares and $8.50 in cash for each FBR share they own. Based on Friday's closing stock prices, the deal values FBR shares at $20.28 each, a 21% premium. As part of the deal, FBR will deliver $33.5 million in cash to B. Riley at closing, which is expected to occur during the second quarter of 2017.
Richard Hendrix, FBR's current chairman and chief executive, will assume the role of CEO of the combined investment banking and brokerage businesses, which will become a subsidiary of B. Riley Financial.
The combined company "will become a leader in small-cap investment banking and brokerage in the U.S., with 600 names under research coverage," B. Riley Financial said in
a release.
"The combined firm will enjoy an increased capital base as well as meaningful revenue and expense synergies," said Bryant Riley, his company's chairman and chief executive, adding that FBR's banking and brokerage businesses have little overlap of clients, research coverage and capital-raising activities with B. Riley's current operations.
FBR was part of financial firm Friedman Billings Ramsey Group (now known as Arlington Asset Investment) until 2007, when it was spun off as an independent firm.