Raymond James closed its acquisition of the Morgan Keegan brokerage unit from Regions Financial on Monday in a transaction totaling about $1.2 billion in cash.

The closing price was above the $930 million purchase price Raymond James announced in January due to the delay of a $250 million cash dividend payment by Morgan Keegan. That dividend payment was originally slated to be paid by Morgan Keegan to Regions Financial before the close of the transaction. The delay of that dividend payment has resulted in a larger book value for Morgan Keegan. Following the transaction, Morgan Keegan will pay the $250 million cash dividend to Raymond James instead.

“There is no net effect,” Raymond James Chief Operating Officer Dennis Zank said of the movement of the dividend payment, which he said he anticipates will be paid in the next week or so.

The announcement of the closing deal comes right on time for St. Petersburg, Fla.-based Raymond James and Memphis-based Morgan Keegan, which was targeted for late March to early April from the outset.

The next change ahead for the Morgan Keegan Private Client Group offices will be a conversion to the new name Raymond James | Morgan Keegan. That transition of converting the branches’ branding will occur in the next 90 to 120 days, Zank said. Converting Morgan Keegan clients over to Raymond James’s systems will then take place early next year, he said.

From the feedback Zank has heard so far from the financial advisors, they are excited to have the Raymond James name hanging on their offices.


“I think they’re pretty excited about being part of Raymond James,” Zank said. “They have been part of Regions for a long time, so if you look at a lot of their locations, they have a co-branded situation between Regions and Morgan Keegan, and Raymond James has a pretty strong franchise in the private client side of the house.”

Zank said he has also heard positive feedback from the financial advisors about the marketing capabilities for their practices they will have access to through Raymond James, as well as the trust services and banking and mortgage products.

“While they’re (Morgan Keegan) a great firm and have been a great firm for a long time, I think in the private client side of the house, we’re just a little more capable in many areas,” Zank said. “That’s just a function of size. At 1,000 advisors, you can afford things, and at 5,000 you can afford different things.”

The combined firm is slated to include a total of 6,500 financial advisors including Raymond James’s traditional and independent channels, as well as its Canadian business. Of the Morgan Keegan financial advisors who have been offered retention packages, 98% have opted to stay with the firm.

Raymond James has also successfully lured in Morgan Keegan’s top 12 executives, six of whom are in the private client unit. That includes four regional directors and two co-heads of the private client business, according to Zank.

Raymond James has currently laid off a total of 218 employees as the firms combine, including a total of 68 positions based in Memphis. Those positions have mostly been in the equity capital markets and fixed income capital markets businesses, according to Zank, resulting from overlap in areas like institutional sales coverage and research.


“This is by far going to be the largest wave,” Zank said of the layoffs that have happened so far. “We’re not interested in wringing out the last nickel of cost savings on this near term at all. We’re much more concerned about trying to maintain service levels.”

The combined firm will have a total of 2,600 locations in the U.S., Canada and internationally. Its total client assets will reach about $372 billion.

Lorie Konish writes for On Wall Street.









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