In an effort to expand both its private client wealth management and capital markets businesses, and noting that timing and pricing are right, Raymond James Financial Inc. has entered into a definitive stock purchase agreement to acquire Morgan Keegan & Company Inc. and related affiliates from Regions Financial for $930 million. Memphis-based Morgan Keegan’s Lafayette office is located in River Ranch; it has eight financial advisers with four assistants, one insurance specialist, an office manager and a receptionist.
In all, the acquisition will add 1,000 private client financial advisers to Raymond James’ adviser count, bringing it to more than 6,000. Raymond James is headquartered in St. Petersburg, Fla. At least for the foreseeable future, it is expected that the name Morgan Keegan will be retained.
Regions Financial will also receive a $250 million dividend from Morgan Keegan, bringing the total value of the deal to the bank to $1.18 billion. The deal is expected to close by March 31 of this year.
“While our preference is generally organic growth, we have used strategic mergers to grow throughout our history when the timing and pricing are right and, most importantly, when there is a strong cultural fit and clear path for integration,” Raymond James CEO Paul C. Reilly said in announcing the acquisition. “This merger reflects those tenets. Morgan Keegan private client and capital markets professionals are well-respected in the industry for their capabilities and client-service orientation. Bringing them to Raymond James and working with their excellent management teams represents a major step toward achieving our vision of being the premier alternative to Wall Street.”
The combined businesses of two of the Southeast's biggest brokerages will create one of the country’s largest full-service wealth management and investment banking firms not headquartered on Wall Street.
Regions is expected to use the proceeds from the sale to help pay off its $3.5 billion debt to the U.S. government, money it received as part of the Troubled Asset Relief Program.
Listing acquisition highlights, Raymond James noted that Morgan Keegan, with an anticipated $700 million tangible book value at closing, has demonstrated stability and profitability across economic and market cycles. Together, the firm expects its financial planning, high-net-worth and retail front-end support systems to drive greater financial adviser productivity.
As part of the merger, Morgan Keegan CEO John Carson will join Raymond James Financial as president and will oversee Fixed Income and Public Finance. Other senior leaders from Morgan Keegan will be joining the firm in roles yet to be determined.
Raymond James, which celebrates its 50th anniversary this year, affirmed its commitment to maintaining a large presence in Memphis, Tenn., where it has had retail and institutional offices for years prior to the merger. Raymond James’ Fixed Income and Public Finance businesses will be centered in Memphis, and the firm intends to continue to operate a regional support center there.
Read more about the acquisition here.