Morgan Keegan Buyer May Get $200 Million In Seller Financing

Tuesday, October 25, 2011 07:07
Morgan Keegan Buyer May Get $200 Million In Seller Financing

Tags: M&A

Regions Bank may be close to a deal to sell independent broker-dealer Morgan Keegan, but is reportedly offering $200 million of its own cash to make it happen.

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Two private equity groups have emerged as final bidders for the troubled firm, which was slapped with $210 million in fines over the summer related to its boom-era mortgage securities sales.


The deal might value Morgan Keegan at around $1.1 billion while protecting all parties but the firm itself.


The $200 million in financing would effectively buffer the buyers' balance sheets from the liability the $210 million in fines represents.


And Regions itself will pull $250 million in equity from the firm before the deal closes.


Seller financing is crucial in this environment because third-party lenders are simply no longer as interested in sponsoring billion-dollar M&A without a personal stake in the proceedings.


Stifel was in the running as a potential buyer, but its offer was declined when Regions considered the likelihood that Morgan Keegan reps would jump ship rather than move to a rival brokerage firm. 


As the property of several private equity firms, Morgan Keegan -- and its reps -- could enjoy a lot more operational freedom here. No bank parent, and the prospect of being absorbed into a rival looks scant.



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