Raymond James Financial Inc. (RJF) is nearing an agreement to buy Regions Financial Corp. (RF)’s Morgan Keegan brokerage unit for about $930 million in cash, said a person with knowledge of the matter.
Raymond James may tap Morgan Keegan Chief Executive Officer John Carson as its president and head of fixed income, said the person, who spoke on condition of anonymity because the talks are private. The St. Petersburg, Florida-based brokerage may be ready to disclose a deal as soon as this afternoon, according to the person.
Adding Morgan Keegan would bring Raymond James one of the top underwriters of U.S. municipal bonds and would expand its retail brokerage network, placing it among the nation’s biggest firms. Raymond James has about 5,100 financial advisers compared with 1,200 at Morgan Keegan.
“A merger like this would be very positive for Raymond James,” said Mark Williams, a lecturer at Boston University’s School of Management. “They can’t grow organically in this market.”
Regions plans to collect a $250 million dividend from Morgan Keegan before the sale, boosting the amount of cash proceeds to about $1.2 billion, the person with knowledge of the talks said.
The talks, while at an advanced stage, could still fail to result in a deal, the person said. Mel Campbell, a spokesman for Birmingham, Alabama-based Regions, declined to comment on the discussions. Representatives of Raymond James didn’t return calls or an e-mail message seeking comment.
Regions said in June it hired Goldman Sachs Group Inc. to seek a buyer for Memphis, Tennessee-based Morgan Keegan. The bank is seeking to bolster capital and eventually repay a $3.5 billion U.S. bailout, the largest still outstanding for any institution under the Treasury’s bank-rescue program.
Regions previously discussed a sale of the brokerage with Stifel Financial Corp. (SF) and with private-equity investors, according to people with knowledge of the matter. Stifel, after being excluded from the talks in December, returned to the bargaining table last week, the people said.
Stifel submitted its latest offer, of about $875 million in cash and stock, on Jan. 8, two people said.
Founded with five workers in 1969, Morgan Keegan has more than 300 offices across the Southeast and Midwest, including Texas, Missouri, Ohio, the Carolinas and Florida. It has more than 3,100 full-time employees.
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