Regions Financial Corp. has re-opened talks with rival Stifel Financial Corp. to bolster the unit’s auction, Reuters reported Thursday. Regions resumed talks with Stifel after bids from two potential private-equity groups came in lower than expected. Thomas H. Lee Partners and a consortium that includes Blackstone Group and Carlyle Group submitted bids in the $750 million range that included financing from Regions, Reuters wrote.
(Reuters) – Regions Financial Corp has re-opened talks with rival Stifel Financial Corp to bolster the unit’s auction, sources familiar with the matter said.
Regions resumed talks with Stifel after bids from two potential private-equity groups came in lower than expected amid tight financing markets and challenging operational environment for Morgan Keegan, the sources said.
Thomas H. Lee Partners and a consortium that includes Blackstone Group and Carlyle Group submitted bids in the $750 million range that included financing from Regions, one of the sources said.
Morgan Keegan has a book value of about $1.5 billion, sources have said previously.
Regions has also offered to provide up to $200 million in financing to the buyer, the sources said.
Stifel was among several parties to express an interest in buying Morgan Keegan, but was left out of the race early in the process as Regions worried that selling the unit to a rival might lead to an exodus of brokers worried about the overlap and their jobs, one source said.
But with the private equity firms lowering their bids, Regions decided to go back to Stifel, the source said.
Bringing in another bidder could also put pressure on the private equity firms to raise their offers, the source added.
Regions plans to take a $250 million cash dividend from Morgan Keegan before closing on a sale of the brokerage unit, sources said.
Regions and Carlyle declined to comment. Stifel, Blackstone and Thomas H. Lee could not be immediately reached.
Birmingham, Ala.-based Regions on June 22 said it had hired Goldman Sachs to explore options for Memphis-based Morgan Keegan, which has more than 300 offices spanning the U.S. South, Midwest, Texas and the Mid-Atlantic.
Regions bought Morgan Keegan for $789 million in 2001, just after the tech stock rally peaked and as most commercial banks snapped up fee-producing regional brokerages and trading firms. Morgan Keegan, which has more than 1,200 financial advisers, was formed in 1969.
Separately, St. Louis-based Stifel said on Wednesday its third-quarter earnings and revenue fell as sluggish markets sapped investment banking and trading, offsetting growth in its retail brokerage. (By Rick Rothacker and Paritosh Bansal)