UBS’ first acquisition in over a year could signal a new U.S.-market strategy. UBS has agreed to buy Minneapolis-based Piper Jaffray’s brokerage business for $500 million in cash. The sale gives Piper a chance “to focus all of its human and financial capital on one goal [of] becoming the leading middle-market investment bank,” according to a note on its website.

“This sale will be the culmination of a thoughtful and comprehensive process, during which we concluded that this strategic direction will ensure that each of the business segments will have the necessary resources to achieve sustainable, competitive performance,” says Piper’s chairman and CEO Andrew Duff. “This transaction will create the best overall result for our clients, employees and shareholders.”

Piper’s is the third big regional nabbed by a wirehouse in the past 10 months. Last June Legg Mason agreed to exchange its retail brokerage and chunk of stock for Citigroup’s asset management business. A few months later Merrill Lynch bought Advest from AXA.

There was also a flurry of deals in the discount-brokerage space last year, thanks mostly to E-Trade. The New York-based online brokerage bought BrownCo from JPMorganChase and Harrisdirect from BMO Financial.

Podunk

The deal between UBS and Piper includes the assignment of a portfolio of client loans for around $300 million and an additional, conditional cash component of $75 million at closing.

UBS and Piper say the transaction will be completed within a few months. Under the agreement, Piper’s brokerage business will be integrated with UBS Wealth Management U.S. – in order, says UBS, to reinforce the company’s position in the Midwest and West.

Piper employs 800 or so reps in 90 offices in 22 states, most of them west of the Mississippi. UBS’ U.S. retail brokerage network employs about 7,500 reps in 346 offices in 47 states. Though the deal puts UBS in just two states where it had not been before, a spokesman for the firm says it’s “concentrated on the coasts” with a smattering of small offices throughout across the country.

The trick for UBS will be keeping reps from bolting, says a source close to Piper, who spoke on the condition of anonymity. With that in mind, she says UBS will probably take pains to make the transition as smooth as possible, with minimal disruption to the services and third-party relationships Piper brokers have grown used to.

That source also thinks UBS is too smart to try to make Piper reps – many with a decidedly middle-class client base – into super-slick, up-market advisors. “I don’t think they’ll come in cracking whips,” she says. “I expect that UBS really is looking at this as a way [to serve] some of those very wealthy people who aren’t in major centers, [but] also to get in front of some of that lower-tier retirement business.”

In fact UBS Wealth Management head Marten Hoekstra calls purchase of Piper’s brokerage business “a natural fit with our current wealth-management offering,” that will “allow UBS to serve a broader base of clients.”

UBS is one of the busiest wealth-business acquirers out there. Though it took most of 2005 off – pausing to sell Julius Baer an alternatives manager and few local private banks in Switzerland – UBS CEO Peter Wuffli recently made it clear the Zurich-based megabank was ready to get back on the acquisition trail – with U.S. and European targets uppermost in mind. –FWR

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