U.S. Bancorp to pay up to $1B for the investment bank BTIG

• Key Insight: Acquiring BTIG could help U.S. Bancorp fill out its capital markets services, both the company and several analysts said.
• Supporting Data: U.S. Bancorp plans to spend up to $1 billion to buy BTIG, which has $372.1 million of assets.
• Expert Quote: “We’ve been dating BTIG for 10 years,” said U.S. Bancorp’s Stephen Philipson. “We can finish each other’s sentences, and we knew they were the right ones.”

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U.S. Bancorp has reached a deal to buy a longtime collaborator, the global investment bank BTIG.

The Minneapolis-based parent company of U.S. Bank said it reached an agreement Monday to acquire BTIG, which has $372.1 million of assets, for up to $1 billion in cash and stock. The deal is expected to close in this year’s second quarter.

“This acquisition will enable both organizations to deliver greater value, innovation and efficiency to the companies and institutions we serve,” U.S. Bancorp CEO Gunjan Kedia said in a statement.

BTIG, which has offices in 20 cities around the world, does business in a variety of fields, including investment banking, prime brokerage, research and institutional sales and trading. As such, the firm could fill an important void in U.S. Bancorp’s capital markets offerings.

“We have had a gap on the equity and merger-and-acquisition advisory side,” Stephen Philipson, U.S. Bancorp’s head of wealth, corporate, commercial and institutional banking, told American Banker. “We knew at some point we would likely fill that gap, as we are the largest bank without those capabilities.”

The two firms are far from strangers. Since 2014, the $695 billion-asset U.S. Bancorp has been referring clients to BTIG when they’ve sought advice on equity capital markets deals, with the two companies splitting the fees. In 2023, BTIG became U.S. Bancorp’s referral partner for M&A deals as well.

“We’ve been dating BTIG for 10 years,” Philipson said. “We can finish each other’s sentences, and we knew they were the right ones.”

In the past, Philipson said, some clients would accept U.S. Bancorp’s referrals to BTIG, but many others wouldn’t. So bringing BTIG’s capital markets capabilities in-house, in his view, solves an important problem.

“They’ve asked over the years, ‘When will you get into this business?'” Philipson said. “They really were looking for us to fill out this gap in our product suite.”

A number of analysts responded favorably to the deal, predicting that the two companies’ integration should be relatively seamless, given their long partnership.

“We believe this transaction will be beneficial for U.S. Bancorp, as the acquisition of BTIG will bolster its capital markets business,” David Long, an analyst at Raymond James, wrote in a research note. “These two firms have a history of collaboration; therefore, the integration should transition smoothly.”

However, investors did not immediately respond well to the news. By early Tuesday afternoon, U.S. Bancorp’s stock price was down by about 1%.

U.S. Bancorp said Tuesday that it will keep BTIG’s leadership team intact, with CEO Anton LeRoy staying on. Retaining BTIG’s management could help U.S. Bancorp to avoid losing the investment bank’s clients and employees, Raymond James’ Long noted.

For his part, LeRoy said he looks forward to the two companies’ integration.

“With a long history of successful collaboration, we are thrilled to join U.S. Bancorp as a means of increasing our collective impact with institutional and corporate clients,” LeRoy said in a statement. “Our clients will continue to enjoy the same level of high-touch service and attention from our committed leadership team, while our employees will benefit from additional resources and new opportunities as part of a leading global financial institution.”