Regions Financial (RF) Announces Sale of Morgan Keegan to Raymond James (RJF) for $930M, Sees Q4 EPS Topping Expectations
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Price: $19.68 -0.46%
EPS Growth %: -40.3%
Financial Fact:
Total non-interest income: 599M
Today's EPS Names:
DGICA, UXIN, TOWN, More
EPS Growth %: -40.3%
Financial Fact:
Total non-interest income: 599M
Today's EPS Names:
DGICA, UXIN, TOWN, More
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Regions Financial Corp. (NYSE: RF) 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. (NYSE: RJF), 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.
Based on the relative fair value allocation, portions of the impairment charge are expected to be recorded in the statement of operations within both Discontinued Operations and Continuing Operations. The calculations of the amount of the charge and the allocations are not yet final and are subject to change. Based on currently available estimates, for purposes of the attached pro forma capital information, Regions has assumed the goodwill impairment charge to be approximately $693 million in the fourth quarter of 2011. The goodwill impairment charge is a non-cash item which will not have a negative impact on regulatory capital.
Upon consummation of the sale of Morgan Keegan, which is expected to occur in the first quarter of 2012, the remaining goodwill allocated to Discontinued Operations will be derecognized and included in the gain/loss on sale. For purposes of the attached financial information the gain is estimated to be approximately $20 million.
Regions expects to record a net loss available to common shareholders for the fourth quarter of 2011 in a range of $432 million to $633 million or $(0.34) per common share to $(0.50) per common share.
Net loss from Continuing Operations is expected to be in a range of $101 million to $197 million or $(0.08) to $(0.16) per common share. Net income from Continuing Operations without the goodwill impairment charge (non-GAAP) is expected to be in a range of $88 million to $119 million or $0.07 to $0.09 per common share, versus the consensus of $0.05. All amounts included above are estimates and are subject to change. Details of the fourth quarter and full year 2011 results will be provided in our earnings release on January 24, 2012. See reconciliation below of GAAP to Non-GAAP measures.
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.
Based on the relative fair value allocation, portions of the impairment charge are expected to be recorded in the statement of operations within both Discontinued Operations and Continuing Operations. The calculations of the amount of the charge and the allocations are not yet final and are subject to change. Based on currently available estimates, for purposes of the attached pro forma capital information, Regions has assumed the goodwill impairment charge to be approximately $693 million in the fourth quarter of 2011. The goodwill impairment charge is a non-cash item which will not have a negative impact on regulatory capital.
Upon consummation of the sale of Morgan Keegan, which is expected to occur in the first quarter of 2012, the remaining goodwill allocated to Discontinued Operations will be derecognized and included in the gain/loss on sale. For purposes of the attached financial information the gain is estimated to be approximately $20 million.
Regions expects to record a net loss available to common shareholders for the fourth quarter of 2011 in a range of $432 million to $633 million or $(0.34) per common share to $(0.50) per common share.
Net loss from Continuing Operations is expected to be in a range of $101 million to $197 million or $(0.08) to $(0.16) per common share. Net income from Continuing Operations without the goodwill impairment charge (non-GAAP) is expected to be in a range of $88 million to $119 million or $0.07 to $0.09 per common share, versus the consensus of $0.05. All amounts included above are estimates and are subject to change. Details of the fourth quarter and full year 2011 results will be provided in our earnings release on January 24, 2012. See reconciliation below of GAAP to Non-GAAP measures.
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