RCS Capital (RCAP) Spikes on $1.5 Billion Acquisition Announcement

Jacob Harper |

On Jan. 17 RCS Capital Corp (RCAP) announced the acquisition of Cetera Financial Group to the tune of $1.5 billion, making RCS one of the country’s largest independent brokerages, with over $191 billion in managed assets.

Even before the acquisition, RCS Capital sported a strong profile, with a microscopic P/E of 4.89 and a projected doubling this year of EPS growth. Now with the acquisition, RCS is making clear that they are making their move into the big leagues of indie finance. Chairman Nicholas Schorsch said as much on the acquisition news, saying macro conditions were perfect to make the play for Cetera.

"We think this is the right time in the cycle," Schorsch said in reference to indications the economy is in recovery. “This combination gives us a great platform with massive synergies and the ability build a clearing business in the future or the ability to negotiate a better clearing deal… we are a newly minted investment bank with reach from Wall Street to Main Street.”

In an interview following the deal, Schorsch went on to compare his burgeoning company to household name Merill Lynch. Of course, Merrill Lynch’s story didn’t end well: the company was disgraced in the 2008 financial crisis before being scooped up by Bank of America (BAC) . The Merrill Lynch moniker is now as toxic as the assets that sank them, so much so that the entity might eventually be swallowed and the name discarded.

But if the economy is improving as much as Schorsch believes, then there is room for a new Merrill Lynch, one that could very well be filled by an upstart like RCS that hopefully has learned from its predecessor’s mistakes.

RCS spiked on the deal, gaining 9.66 percent by midday to hit an even $21 a share. RCS went public in June 2013, dropping off after a mediocre initial public offering. With the day’s stock pop, RCS has finally bested its IPO price of $20 a share.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Symbol Name Price Change % Volume
BAC Bank of America Corporation 23.01 0.09 0.39 161,930,864
RCAP RCAP n/a n/a n/a 0
ARGB American Retail Group Inc 0.50 0.00 0.00 0


Emerging Growth

Veritas Pharma Inc.

Veritas Pharma Inc, formerly Seashore Organic Medicine Inc is an emerging producer and distributor of medical marijuana.

Private Markets

BioSculpture Technology, Inc.

BioSculpture Technology, Inc. (“BST”) is a commercial-stage medical device manufacturer of liposuction surgical instruments for surgeons. It offers the FDA-cleared Twin Cannula Assisted Liposuction ("TCAL") Airbrush Liposculptor II® controllers, Airbrush®…

Cross Campus

With over 500 members and operating 80,000 square feet by summer 2016, Cross Campus is one of the country’s top ten shared, collaborative office or "coworking" operators in the US.…