Morgan Keegan May Go For $1 Billion and Regions Offers $200M to Help Finance the Deal

Regions Financial Corporation, the parent company of Morgan Keegan, is offering $200 million to help finance the sale of its beleaguered brokerage unit, according to Bloomberg. Sources say that the deal could be worth $1 billion or more and may be concluded within the next several weeks. The bidding boils down to a couple of private equity firms.

Sources indicate that one of the groups bidding on Morgan Keegan is the Carlyle Group and the Blackstone Group LP. The other consortium is Thomas H. Lee Partners LP and Jeffrey Greenberg’s Aquiline Capital Partners LLC. Bids are set to be in the $1.1 billion range and the deal is expected to be finalized in the next month or so. One other firm, Stifel Financial out of St. Louis made an offer recently, which was turned down by Regions.

The idea of using its own resources to help get rid of a subsidiary is not new. In 2009, Barclays PLC did it when they were trying to unload BlackRock Incorporated. So did Fifth Third Bancorp, when a big stake was made in the bank’s payment processing by Advent International.

Regions had net income of $155 million, compared with a net loss of $155 million a year earlier. This makes four consecutive quarters where the firm has posted a profit. Morgan Keegan had a profit of $26 million, which was up from the third quarter of 2010 when it made $22 million.

Regions admitted that the sale of the brokerage unit has gone much slower than first anticipated. The firm has cited the slow pace of economic recovery in the U.S. and economic turmoil abroad as factors making the sale more difficult.

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