Raymond James Financial on Monday said it finalized its acquisition of Regions Financial Corp.'s Morgan Keegan brokerage unit, a deal that boosts Raymond James' private wealth management and capital markets businesses and bolsters its role as one of the nation's leading broker-dealers.
For St. Petersburg, Fla.-based Raymond James, the deal for Morgan Keegan brings a leading U.S. municipal bond underwriter and a large retail brokerage unit to the fold. Raymond James had about 5,100 financial advisors and Morgan Keegan had roughly 1,200 financial advisors when the purchase was announced in January.
Raymond James earlier said it offered retention packages to advisors with $300,000 or more in production during the past 12 months. In today's announcement, it said that 98 percent of Morgan Keegan advisors who were offered retention packages said they intended to stay with the company.
In addition, the company previously announced that Morgan Keegan's top 12 executives agreed to join Raymond James. Morgan Keegan's former CEO, John Carson, will become president and executive committee member of the parent company and will head its fixed income division.
Morgan Keegan Private Client Group offices will be known as Raymond James | Morgan Keegan, a broker-dealer subsidiary of Raymond James. The combined firm comprises roughly 6,500 financial advisors in 2,600 locations throughout the United States, Canada and overseas, with total client assets of about $372 billion.
Regions began shopping Memphis-based Morgan Keegan last summer to help it repay a $3.5 billion U.S. bailout as part of the U.S. Treasury's bank-rescue program during the financial crisis. It reportedly discussed deals with Stifel Financial Corp. and with private-equity investors before it decided to sell the company to Raymond James.
Raymond James funded the transaction with cash on hand and the proceeds of $350 million in 6.9 percent senior notes due 2042, $250 million in 5.625 percent senior notes due 2024 and a public offering of 11,075,000 shares of common stock.
The amount paid by Raymond James was approximately $1.2 billion in cash. The previously announced stock purchase agreement said Morgan Keegan would pay a cash dividend of $250 million to Regions prior to the closing of the acquisition. But the parties subsequently decided to defer payment of the dividend until after the closing, resulting in an increase in the book value of Morgan Keegan and the purchase price. Following the closing, Raymond James will receive a $250 million cash dividend from Morgan Keegan.