A pair of U.S. investment banks — Piper Jaffray Co. and Sandler O’Neill + Partners LP — are teaming up in a US$485 million merger deal.

The firms announced a definitive merger agreement that will see Piper Jaffray acquire 100% of financial sector specialist Sandler O’Neill for US$350 million in cash and US$135 million in restricted stock. Piper Jaffray also agreed to provide US$115 million in long-term retention incentives to Sandler O’Neill employees.

The combined company, which will be known as Piper Sandler Companies, helps Piper Jaffray build out its M&A advisory business, diversifies its fixed income business and expands equity research and sales and trading.

“Piper Jaffray is very focused on competing in market sectors where we can be a market leader and leverage our specific expertise. With Sandler O’Neill, we start with the market leader and could not be positioned better to compete in the financial services sector over time,” Chad Abraham, CEO of Piper Jaffray, said in a statement.

“This transaction strengthens, diversifies and accelerates the growth of the Piper Jaffray investment banking, capital markets and institutional distribution businesses,” he added.

The deal is expected to close in January 2020, subject to regulatory approvals and the satisfaction of other closing conditions. The transaction is also expected to be accretive to earnings per share in 2020.