Cowen Group shareholders approved the firm's takeover of market maker LaBranche & Co, Traders Magazine reports.  The $193 million deal will double the size of the investment banking and money management firm and give Cowen technology to support a wider array of trading services.  The acquisition is part of a plan, underway since last year, to diversify away from Cowen's bread-and-butter cash equities business.

Despite exiting the market making business in the past two years, LaBranche still owns the technology to make markets. Thus. the deal gives offers Cowen the ability to make markets in stocks, options and ETFs in the U.S., Europe and Asia.

"LaBranche has made substantial progress in their development of proprietary information technology and electronic trading systems.   We can leverage that with Cowen's existing equity and derivative sales and trading capabilities."  -- Peter Cohen, Cowen Chairman, CEO.

Cowen Has Been Hiring, Too.   The acquisition coincides with a spate of recent hiring at Cowen in electronic trading - a 3-man crew from derivatives specialist Newedge Group; Doug Rivelli, a long-time e-trading expert, from Weeden & Co.  They've also dipped into listed options and convertible bonds.   Two years ago Cowen recruited an executive from Morgan Stanley's program trading desk to grow that service.

While Cowen's equities business has suffered along with the rest of the Street in the wake of the financial crisis, its problems didn't just surface in the past two years.  Since 2004, the firm's brokerage revenues have been flat or in decline.

Cowen Is Acquired.   Its troubles made it ripe for a takeover. Ramius Capital Group, a hedge fund run by industry veteran Cohen, bought Cowen in 2009. Since the acquisition, Ramius executives have taken complete control of the firm, jettisoning many staffers in the investment bank. "The investment bank is smaller today and roughly half of the capital markets individuals are new," Sandler O'Neill analyst Devin Ryan wrote in a recent report.  The combined Cowen Group now operates two divisions: the Cowen and Co. investment bank and the Ramius hedge fund operation.

Besides the push on the trading front, Cowen also feels pressure to beef up its research product. At the end of last year, the firm had 27 senior analysts covering about 400 firms. One quarter of those stocks were in the healthcare industry, Cowen's specialty. This year, the number of analysts has increased to 30, according to Solomon, and more hires are expected.

For further details, go to:   [TradersMagazine, 6/23/11, Peter Chapman Reports..]