[ by Melanie Gretchen and Howard Haykin ]

Agrees to Buy Keefe Bruyette's Parent Company.

Stifel Financial Corporation agreed on Monday to buy KBW Inc. for about $575 million in cash and stock, subject to approval by KBW's shareholders and regulators.  Going forward, Stifel would have a prominent adviser to the financial services industry.  If approved, Stifel will pay $10 a share in cash and $7.50 a share in stock.  KBW shareholders will receive stock based on Stifel's volume-weighted average closing price for the 10 days before closing.

No End in Sight? Today's purchase is just the latest among recent deals, having acquired Thomas Weisel Partners and reached a partnership with the restructuring specialists Miller Buckfire, which Stifel has indicated that it would like to buy outright.  Since the announcement was made, shares in KBW leaped 17.5% in premarket trading on Monday, to $19.15, while those in Stifel rose 1.9%, to $32.50.

KBW (short for Keefe Bruyette & Woods), a 50-year-old, New York-based firm, made its name catering to the financial services industry.  Specifically it's known for:

• advising on deals involving banks, insurance companies and trading concerns
• its research arm

On a Roll. No doubt it hopes to build on recent success, including:

• outperforming its soon-to-be parent's over the last year, with its shares having risen 17.5% compared with less than 1% for Stifel.
• growing over 5 decades from an 8-person shop into a 537-employee firm with offices in the United States, Europe and Asia

What to expect in the event of success:

• Thomas B. Michaud, KBW's CEO, will join Stifel's board, and will continue to lead KBW as a separate business division.
• an annual net revenue by the combined company of $1.8 billion, based on results through 9/30/12.

For further details, go to:   Dealbook, 11/5/12].