BIRMINGHAM, Ala. — Regions Financial Corp. has entered into a stock purchase agreement to sell Morgan Keegan & Company Inc. and related affiliates to Raymond James Financial Inc., for $930 million.
As part of the transaction, Morgan Keegan will also pay Regions a dividend of $250 million before closing, pending regulatory approval, resulting in total proceeds of $1.18 billion to Regions, subject to adjustment as described below.
The transaction is anticipated to close during the first quarter, subject to regulatory approvals and customary closing conditions.
Morgan Asset Management and Regions Morgan Keegan Trust are not included in the sale and will remain part of Regions’ Wealth Management organization.
Regions expects to record a net loss available to common shareholders for the fourth quarter of 2011 in a range of $432 million to $633 million or $(0.34) per common share to $(0.50) per common share. Net loss from continuing operations is expected to be in a range of $101 million to $197 million or $(0.08) to $(0.16) per common share. Net income from continuing operations without the goodwill impairment charge (non-GAAP) is expected to be in a range of $88 million to $119 million or $0.07 to $0.09 per common share. All amounts included above are estimates and are subject to change.
Details of the fourth quarter and full year 2011 results will be provided in Regions’ earnings release January 24, according to the Birmingham, Ala.-based financial institution.
The transaction is expected to increase Regions’ Tier 1 Capital (regulatory) and Tier 1 Common (non-GAAP) ratios by approximately 13 basis points and 9 basis points, respectively.
Regions previously announced that it had retained Goldman, Sachs & Co. to explore potential strategic alternatives for Morgan Keegan as part of the process of evaluating how best to manage its capital to increase shareholder value. Sullivan & Cromwell, LLP advised Regions on the transaction.
Agreement details include:
• Total proceeds of $1.18 billion, including a $250 million dividend paid by Morgan Keegan to Regions prior to close, pending regulatory approval. The transaction purchase price is subject to adjustment based on the closing tangible equity of Morgan Keegan and retention of Morgan Keegan associates in the immediate post-closing period.
• Regions will indemnify Raymond James for all litigation matters related to pre-closing activities. In addition, Regions will receive the benefit of previously established reserves by Regions at Morgan Keegan.
• Memphis, Tenn., where Morgan Keegan is currently headquartered, will be the headquarters of Raymond James’ fixed income and public finance businesses. Additionally, Raymond James will continue to operate a regional support center in Memphis.
• Regions and Raymond James will enter into several mutually beneficial business relationships, including for deposits and loan referrals.
• Expected to close within the first quarter, subject to regulatory approvals.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info