Regions Financial Corp. (RF) may seal the divestment of its brokerage unit Morgan Keegan & Co. as early as next week, a report in the Wall Street Journal said Friday, naming Raymond James Financial Inc. (RJF) and Stifel Financial Corp. (SF) as potential buyers. The sale price is expected to be in the range of $900 million and $1 billion, according to the report.
The forthcoming transaction might also see Morgan Keegan pay $250 million in dividends to Regions, the report added. Further, Raymond James may receive financial assistance from JPMorgan Chase & Co. (JPM) in the form of a $900 million line of credit, while Stifel Financial is said to have obtained a financial commitment whose details were not available.
However, since Regions owes the United States government $3.5 billion in Troubled Asset Relief Program, or TARP, repayments, a sell-off would need to be blessed by federal regulators. The report also quoted Grayson Hall's, chief executive at Regions, comment at an investor conference that the "challenging" market conditions were another hurdle that slowed down the divestment. Initially, Regions expected the sale to fetch around $1.5 billion, the report noted, but had to whittle down anticipations due to the delay.
Another concern voiced by the report is the possibility of job losses arising from Morgan Keegan's merger with a brokerage industry peer, due to which current employees are said to prefer an acquisition by a private-equity firm. Raymond James has 5400 employees, while Stifel's headcount numbers around 2000, the report said.
At close on Friday, RF traded at $4.41 on the NYSE.RJF ended trading on Friday at $32.79, also on the NYSE.SF traded at $33.24 on the NYSE, when the market closed on Friday.
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