MJSK acquisition extends Midwest regional's reach in northern plains states. St. Louis-based Stifel Financial has agreed to buy Minneapolis-based Miller Johnson Steichen Kinnard's (MJSK) private-client business in exchange for an undisclosed sum of cash. Stifel says it expects to close the deal before this year is out.

"By adding the talented investment professionals from MJSK, Stifel is able to further expand our footprint in Minnesota where we currently have seven offices," says Ronald Kruszewski, chairman and CEO of Stifel Financial and its principal subsidiary Stifel Nicolaus.

MJSK isn't the only local brokerage to have attracted the attention of bigger suitors. Toronto-based RBC Financial bought Minneapolis-based Dain Rauscher in 2000. Earlier this year Swiss bank UBS acquired the private-client business of Piper Jaffray, Dain's cross-town rival.

In addition to extending Stifel's reach in Minnesota, especially in the Minneapolis- St. Paul area, buying MJSK's private-client business will give it more market share in the Dakotas and in Arizona.

Though its retail-brokerage business brought in around 80 percent of Miller Johnson's $34 million in revenue last year, MJSK's CEO David Johnson says it's "a highly regulated business with thin margins" calling for "capital and critical mass to do a good job for your clients."

Billionaire arms dealer

About 100 of its employees will move from MJSK to Stifel, according to MJSK. The Minneapolis firm will keep its capital markets group, which employs about 30 people.

MJSK used to be a lot bigger than it is now. In 2001 it had nearly 400 brokers and annual sales of around $137 million. But regulators forced the firm into liquidation that year after it lost at least $200 million in a complex and far-reaching fraud scheme orchestrated by Saudi Arabian businessman Adnan Khashoggi and to some extend involving -- to judge by the results of an out-of-court deal settled a few months ago in favor of MJSK's erstwhile parent Stockwalk -- Deutsche Bank.

"We were able to revitalize this company after four or five years of hard work," MJSK's head of sales and marketing Matthew Kyler told the St. Paul Pioneer Press last week. "That attracted the attention of a firm like Stifel." -FWR

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