Under terms of the deal announced late Wednesday, Jan. 11, Morgan Keegan will also pay Regions a $250 million dividend before the deal's expected close by the end of March, bringing its total value to $1.18 billion. Only the Morgan Keegan brokerage, capital markets and investment banking business are being sold, while Morgan Keegan Asset Management and Regions Morgan Keegan Trust will remain with Regions.

The Birmingham, Ala.-based bank put Morgan Keegan on the block about six months ago in an effort to raise capital to help repay its $3.5 billion in Troubled Asset Relief Program borrowings. In late June, Regions announced that it had hired Goldman, Sachs & Co. to explore strategic alternatives for Morgan Keegan. Shortly thereafter, reports began to surface about interested bidders including St. Petersburg, Fla.-based Raymond James and Stifel Financial Corp. of St. Louis. A financial institutions group banker said at the time that interested buyers were not willing to pay the roughly $1 billion Regions was seeking for Morgan Keegan.

Due to uncertainty about the future of the company, Morgan Keegan has lost brokers over the past few months, which some sources said would hurt the value of the company. An analyst requesting anonymity said about $600 million to $700 million in assets under management were lost in recent months as brokers left the firm with clients in tow. He added that the firm lost 20 to 30 brokers over the past month or so. Regions has about $132 billion in assets. Morgan Keegan's assets could not be ascertained.

A Morgan Keegan spokeswoman could not be reached.

Nonetheless, for Raymond James, Morgan Keegan expands its southeastern distribution base and offers cost savings due to geographic overlap, said an M&A banker in an earlier Deal Pipeline report. Furthermore, the business "can throw off profits of $100 million to $200 million every year" and generates about $1 billion in revenue, said Guggenheim Partners LLC analyst Marty Mosby, in that earlier report.

Morgan Keegan has more than 300 offices in 20 states and about 1,200 brokers. Raymond James has about 5,400 financial advisers in 2,400 locations throughout the U.S., Canada and overseas with total client assets of about $268 billion.

Regions will indemnify Raymond James for any litigation matters related to pre-closing activities, the company said.

Sullivan & Cromwell LLP counseled regions on the sale. Raymond James was advised by J.P. Morgan Securities LLC and counseled by Morrison & Foerster LLP.