Regions Financial released the following on Wednesday:
Regions
Financial Corp. announced today that it 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.
As a result of the process of selling
Morgan Keegan, Regions expects to record an impairment charge in a range
of $575 million to $745 million (primarily non-deductible) in the
fourth quarter of 2011 related to the $745 million of goodwill included
in its Investment Banking/Brokerage/Trust segment.
The
transaction increases RF's capital ratios and the company believes it
will lead to low cost deposits due to a working relationship with
Raymond James. This is all well and fine, but as to the use of proceeds
all we get is:
Total consideration of $1.180 billion creates significant additional liquidity at the holding company
Here's
a thought: you are being hammered due to your inability to repay TARP,
use the proceeds to at least pay down some of your $3.5B TARP
preferreds. I understand that the 5% dividend is cheap money, but it
has cost shareholders dearly.
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