Hilltop Holdings (HTH) in Dallas has finally reached an agreement to buy the remaining shares in SWS Group (SWS) that it does not already own.

The $9 billion-asset Hilltop will pay $7.88 a share in cash and stock for SWS, the Dallas parent of Southwest Securities, a $1.6 billion-asset thrift with branches in Texas and New Mexico. The companies expect to complete the deal by the end of this year.

"This transaction creates the leading Texas-based broker/dealer and provides PlainsCapital Bank access to a significant source of additional core deposits," Gerald J. Ford, Hilltop's chairman, said in a press release Monday. "The merger will bolster our market share and scale for many business lines within our broker/dealer, as well as our deposit market share in Dallas/Fort Worth."

Hilltop in January sent an unsolicited offer to SWS, offering to pay $7 for each outstanding share. Hilltop already owned about 24% of SWS Group's stock following a $50 million investment in 2011. That offer represented a 16% premium. In comparison, Monday's deal had a 28% premium.

"After a comprehensive review of strategic and financial alternatives, we are pleased to announce a transaction that delivers compelling and immediate cash value for our stockholders, while allowing them to participate in the significant upside potential of a larger, more diversified organization that is strongly capitalized and better positioned to compete in the marketplace," James Ross, SWS Group's president and CEO, saidin the release.

Stephens Inc. and Wachtell, Lipton, Rosen & Katz advised Hilltop. Sandler O'Neill and Davis Polk & Wardwell advised SWS.

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