Multinational investment bank and financial services firm Raymond James Financial, Inc. (RJF) has signed an agreement to acquire Pennsylvania-based bank holding company TriState Capital Holdings, Inc. (TSC) for approximately $1.1 billion.
Following the announcement, shares of Raymond James lost 2.1% in extended trade on Wednesday. Based out of Florida, the company offers investment banking, asset management and financial services to individuals, corporations and municipalities.
Under the agreement, common stockholders of TriState Capital will get 0.25 shares of Raymond James for each common share of TriState Capital and $6 cash. (See Insiders’ Hot Stocks on TipRanks)
The Chairman and CEO of Raymond James, Paul Reilly, said, “This acquisition further illustrates our commitment to utilize excess capital through organic and inorganic growth that we expect to drive strong returns for shareholders over the long term.”
The Chairman and CEO of TriState Capital, Jim Getz, said, “Raymond James’ strong balance sheet will provide supplemental capital and liquidity to continue enabling our fast-growing and highly scalable business model to meet clients’ commercial and securities-based lending and asset management needs.”
Following the completion of the acquisition, which is expected to happen next year, TriState Capital will operate as an independent chartered bank subsidiary of Raymond James. Getz will continue as the Chairman, Tim Riddle will remain Chartwell’s CEO and Brian Fetterolf will continue as the CEO of TriState Capital Bank.
The transaction is likely to be accretive to Raymond James earnings per share (EPS) from the first year after completion. The company further expects more than 8% accretion to EPS after the third year.
Ten days ago, Morgan Stanley (MS) analyst Manan Gosalia maintained a Buy rating on the stock with a price target of $106 (4.3% upside potential). The analyst expects the company to report EPS of $1.49 in the fourth quarter.
Overall, the stock has a Strong Buy consensus rating based on 4 Buys and 1 Hold. The average Raymond James Financial price target of $114 implies 12.1% upside potential. Shares have gained 94% over the past year.
According to TipRanks’ Smart Score rating system, Raymond James scores a “Perfect 10,” suggesting that the stock is likely to outperform market averages.
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