BRADENTON, Fla. — Florida-based Raymond James Financial Inc. on Wednesday priced $250 million of corporate corporate notes as the third round of financing toward $930 million being paid to acquire Morgan Keegan & Co. and MK Holding Inc.
The notes mature in 2024 and sold with an interest rate of 5.62%. Interest will be paid semiannually. JPMorgan, Citi and Raymond James were joint book-runners for the offering.
The Morgan Keegan deal is set to close on April 2.
Integration of the two firms is moving ahead as planned, and 98% of Morgan Keegan’s 1,200 financial advisors have accepted retention incentive offers, according to Raymond James.
“We are very pleased with our progress and have a high degree of confidence in a successful integration,” said chief executive officer Paul Reilly.
On Jan. 11, Raymond James entered into a definitive stock-purchase agreement to acquire Morgan Keegan from Birmingham, Ala.-based Regions Financial Corp.
Earlier this month, Raymond James closed on the first sale of $350 million of senior corporate notes to fund a portion of the purchase. Those notes, due in 2042, sold at an interest rate of 6.9%.
The remaining portion of the purchase price will be funded with cash and the net proceeds from the recently completed public offerings of 11.075 million shares of common stock. Raymond James also entered into a $900 million bridge credit agreement with JPMorgan, if needed.
Although the offerings executed to date were on favorable terms, they will unfavorably affect first-quarter earnings and earnings-per-share due to the increased interest cost and common shares outstanding, since they occurred before the actual acquisition, the company said.
In late February, Raymond James won early termination of a federal pre-merger waiting period under the Department of Justice’s Hart-Scott-Rodino Antitrust Improvements review.
