Rumors have been swirling that Raymond James is now the front runner in talks to purchase Morgan Keegan. This morning, Bloomberg reported that it would likely pay $930 million in cash for the regional broker/dealer, which was put on the block by parent Regions Financial Corp. (RF) this summer after the firm agreed to a $210 million settlement with federal, state and industry regulators over issues related to subprime mortgage-backed securities .
This surprises me, since other published reports said Stifel Financial Corp. was taken out of the running this week because it lowered its bid to below $1 billion. The valuation of Morgan Keegan is expected to total around $1.2 billion, Reuters reports.
Of course, at this point it’s still mostly speculation. Raymond James and Regions spokespeople would not comment on whether a deal was in the works, and journalists are getting their information from “people familiar with the situation,” or “people knowledgeable of the deal.” One analyst I spoke with, who did not have any insider knowledge of the deal, said they were likely informed sources, however.
In these types of big acquisition deals, the firms involved often want to keep details of the negotiations confidential until finalized, and sometimes even after the deal is done to protect their relationships with third parties and employees. But in some cases, word might get out from the inside if a seller wants to encourage a bidding war or put pressure on the buyer to close the transaction.
It seems to be like a case of journalists wanting to beat others to the punch. I’m interested in hearing more about how the reported deal would affect both firms and their reps. I hear that if Morgan Keegan were to go to Raymond James, Morgan Keegan reps would likely be rolled up into Raymond James & Associates, the firm’s traditional employee brokerage. There would be some overlap in Raymond James’ institutional business, so there would likely be some cuts.
So who’s spilling the news? And what’s the motive? If you have any information about a possible deal in the works, please reach out to me at [email protected].