Regions Financial to Sell Morgan Keegan to Raymond James Financial
In the report, Bank of America writes, "Regions Financial (RF) announced that it reached an agreement to sell its Morgan Keegan unit to Raymond James Financial (RJF) for $930mn in cash. Morgan Keegan will also pay RF a $250mn dividend prior to closing (subject to regulatory approval) which results in $1.18bn total proceeds to RF. This dividend is likely to be in excess of the amount that Morgan Keegan would have paid to RF (based on 4Q11 results) and its also improves the price/book metric by reducing the unit's book value via the dividend. The transaction is expected to close during 1Q 2012, pending regulatory approval. Additionally, RF will indemnify RJF for all litigation matters related to preclosing activities. RF will receive $210mn of previously established litigation reserves held at Morgan Keegan. However, we believe that much of this (and potentially more) could be used to settle/satisfy claims."
Regions Financial closed yesterday at $4.80.
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