Birmingham-based Regions Financial will sell its brokerage business, Morgan Keegan & Co., to Raymond James Financial for $930 million.
The stock purchase agreement also includes a $250 million dividend payable to Regions by Raymond James, bringing the total transaction to roughly $1.18 billion. The deal, which is expected to close in the first quarter, is subject to regulatory approval and 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 originally bought Memphis-based Morgan Keegan in 2000 for $789 million.
Regions and Raymond James said part of the merger will include entering into several “mutually beneficial business relationships,” including for deposits and loan referrals. Raymond James is an investment and brokerage services firm, while Regions also offers more comprehensive traditional banking services.
The transaction is expected to help Regions boost its capital levels and eventually repay its $3.5 billion TARP (Troubled Asset Relief Program) payment to the U.S. Treasury.
Morgan Keegan has about 1,000 private client advisors in multiple state across the south and midwest, including Arkansas. St. Petersburg, Fla.-based Raymond James has 6,000 advisors nationally.
In Arkansas, Morgan Keegan has a large presence in Little Rock and additional branches in 12 other cities throughout the state.
More than likely, Morgan Keegan representatives will wait to see what retention or exit packages are offered by Raymond James before making a move. There could also be terminations for low-performing advisors.
Depending on the incentives, other investment groups may begin to bid for the services of seasoned professionals who could quickly grow books of business in a new arrangement. It is a frequent exercise when investment firms merge.
Morgan Keegan was rapped in late 2011 by Arkansas Securities Commissioner Heath Abshure after a three-year investigation.
The ASC order — which included a $200 million settlement and $10 million penalty — showed that Morgan Keegan engaged in a “repeated pattern of providing inaccurate and misleading information” surrounding 7 investment funds to Arkansas investors.