Cowen Group (Cowen), a Nasdaq-listed financialservices provider, shocked the shipping industry Monday after striking a definitiveagreement that set the stage for the acquisition of Wall Street compatriot Dahlman Rose & Co.

In a statement, Cowen said the all-stocktransaction was approved by the boards of both companies and is due to close bythe end of the first quarter but did not shed light on pricing.

Chief executive Peter Cohen toldinvestors that Dahlman’s areas of expertise, like energy and transportation, willprovide a “strong complement” to the sectors in which it operates.

Cohen identified health care, technology, media, telecommunications,consumer, aerospace, defence and industrials as his company’s core segments.

“Through this combination, Cowen will gain sectorfocus in new verticals which we believe will be active areas for capital raisingover the foreseeable future,” he continued.

“In addition, Dahlman Rose’s domain expertise andfocus on fundamental research dovetails with Cowen’s philosophy of excelling inour chosen sectors.”

Jeffrey Solomon, chief executive of affiliate Cowen& Company, described the deal as a “transformative transaction” that willadd “depth and breadth” to the group’s research, sales and trading andinvestment banking teams.

Cowen spots "major untapped revenue opportunity"

In an investment presentation filed with securities regulators, the company said the heads of itsbanking, global capital markets, equities and research units will “workclosely” with their Dahlman counterparts in an effort to ease integration.

Cowen believes the acquisition will help it exploitwhat was described as a “major untapped revenue opportunity” in the chemicals,energy, metals and mining, precious metals, transportation and maritime sectors.

The group pointed out that $105bn worth of debt andequity was raised by non-bulge banks on behalf of clients within Dahlman’s coremarkets between 2010 and 2012.

Cowen claims the three-year total represents roughly $2bn in fees from 974 transactions that were valued at approximately $107m on average.

“Dahlman’s equity fees during this period representedless than 3% of the overall fee pie,” Cowen continued, adding: “With no debtpractice, Dahlman Rose generated nominal fees during this period.”

At last check, Cowen boasted a team of more than 130sales and trading specialists and 80 investment banking professionals in addition to 29 research analysts who cover over 400 companies.

According to regulatory filings, Dahlman’s ranks include34 sales and trading professionals and 11 equity researchers who follow 270companies- including the majority of the US-quoted tanker, bulker and containershipoperators.

News of the acquisition, which is still subject to regulatoryapproval, follows the recent departure of veteran equity analyst Omar Nokta,who left Dahlman’s shipping research division less than three weeks ago.

Observers notethat the Cowen acquisition will likely result in a payday for Lovell MinnickPartners,a private equity firm that paid $40m for what was widely believed tobe a 25% stake in Dahlman back in 2010. It ploughed another $10m into the company twoyears later.

You can read the SEC filing and investor presentation in full by clicking on link located under the Related Media section to the right of this article