published Saturday, February 11th, 2012

Raymond James to keep open Morgan Keegan office in Chattanooga

Two of the largest brokerage firms operating in Chattanooga will come under common ownership in March, but the firms will keep separate names and operations, at least for now.

Raymond James Financial Inc. expects to complete its previously announced purchase of the Memphis-based Morgan Keegan & Co. at the end of March. The deal will elevate Raymond James to one of the biggest U.S. financial advisory firms, but Raymond James officials insist the firm isn't expanding just to boost its size.

"While our preference is generally organic growth, we have used strategic mergers to grow through our history when the timing and pricing are right and, most importantly, when there is a strong cultural fit and clear path for integration," Raymond James CEO Paul C. Reilly said in a statement.

The $930 million paid for Morgan Keegan by Raymond James is well below the $1.5 billion Regions had once hoped to secure for the brokerage firm, but it is still far bigger than the half dozen other brokerage firms Raymond James has bought over the past half century.

The New York Times reports that the sale puts Morgan Keegan's book value at about $700 million. Regions Bank bought the Memphis-based brokerage firm in 2000 for $789 million, but the Alabama bank is selling Morgan Keegan now to help raise capital.

"The economics of this acquisition are such that the valuation is very fair and reasonable and, as a result, this is not your stereotypical Wall Street acquisition in which the minute the ink dries the acquirer has to slash and burn," said Tash Elwyn, president of Raymond James Associates Private Client Group. "Our intent, post closing, to use the best part of 12 months to finalize all of the integration of technology, the back office and such."

In the next year, Morgan Keegan will operate as a wholly owned subsidiary under its own name. But even before the deal has closed, Elwyn said Raymond James has already hosted more than 100 branch managers and top financial advisers from Morgan Keegan offices at Raymond James' headquarters in St. Petersburg, Fla.

In Chattanooga, where Elwyn once was branch manager for Raymond James, the company expects to keep both of Raymond James offices and the Morgan Keegan office. Combined, the local operations will have more than two dozen financial advisers in Chattanooga.

Roughly two-thirds of the private client branches of Morgan Keegan are in markets not served by Raymond James.

"Where there are markets where we co-exist even with our combined success, we still think there are tremendous opportunities to grow in those markets," Elwyn said.

Morgan Keegan has about 1,200 financial advisers in 55 offices. Raymond James hopes to combine with its own 5,400 advisers to create a big new regional brokerage firm.

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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