* SWS rejects $6.25/share cash offer from Sterne Agee
* SWS shares, up 24 pct on Thursday, fall 2.6 pct
* SWS says offer undervalues company's long-term value
NEW YORK, March 18 SWS Group Inc SWS.N, a
tiny, publicly traded brokerage company, rejected a $200
million takeover offer from Sterne Agee & Leach, saying the
deal was not in its shareholders' best interests.
The unsolicited offer of $6.25 a share "substantially
undervalues the future potential of SWS Group," the company
said in a statement on Friday.
In a letter to Sterne Agee Chief Executive James Holbrook,
SWS Chairman Don Buchholz said the "highly conditional
proposal" fails to address important regulatory requirements
and financial commitments.
SWS on Thursday said it previously received and rejected
similar takeover proposals from Sterne Agee.
"We believe SWS Group's stockholders should not be asked to
transfer the future value of the company to Sterne Agee on such
opportunistic terms," Buchholz wrote.
Last year SWS tried but failed to raise $95 million to
bolster its capital after suffering humbling commercial real
Birmingham, Alabama-based Sterne Agee, which has not
returned repeated calls, is a closely held firm.
SWS shares fell 2.6 percent to $5.96 on Friday after
surging 24 percent on Thursday on news of the Sterne Agee
offer. Sterne Agee's proposal represented a 27 percent premium
to SWS' Wednesday closing price but a 40 percent discount to
its book value -- the value of its assets minus its
SWS owns three businesses: broker-dealer Southwest
Securities, the troubled banking unit, and a correspondent
clearing business that services smaller brokers.
KBW analyst Joel Jeffrey told Reuters on Thursday that SWS
last month reported better-than-expected quarterly results but
still has serious credit issues. These include "classified
assets" that could sour and become bad loans if economic
conditions should weaken, he said, while the bank unit now
operates under a federal bank regulator's close supervision.
(Reporting by Joseph A. Giannone; editing by John Wallace)