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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 17, 2000
REGIONS FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-6159 63-0589368
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
417 North 20th Street, Birmingham, Alabama 35203
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(Address, including zip code, of principal executive office)
(205) 944-1300
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On December 17, 2000, Regions Financial Corporation ("Regions") and Morgan
Keegan, Inc. ("Morgan") entered into an Agreement and Plan of Merger (the
"Agreement"), pursuant to which Morgan will be acquired by Regions. The Boards
of Directors of Regions and Morgan approved the Agreement and the transactions
contemplated thereby at separate meetings.
In accordance with the terms of the Agreement, Regions will acquire Morgan
pursuant to the merger (the "Merger") of Morgan with and into Regions, with
Regions as the surviving entity resulting from the Merger.
Upon consummation of the Merger, each share of the $.625 par value common
stock of Morgan ("Morgan Common Stock") (excluding shares held by Morgan,
Regions, or any of their respective subsidiaries, in each case other than in a
fiduciary capacity or as a result of debts previously contracted) issued and
outstanding at the effective time of the Merger (the "Effective Time") shall,
subject to the election procedures described below, be converted into a
multiple (rounded to three decimal places) of a share (the "Merger Shares") of
the $.625 par value common stock of Regions ("Regions Common Stock") equal to
the quotient obtained by dividing (i) $27.00 by (ii) the Average Price (as
defined below) (the "Exchange Ratio").
For purposes of the Agreement, the Average Price means the average of the
daily volume weighted averages of the trading prices of Regions Common Stock as
reported on the Nasdaq NMS (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source agreed to by Morgan and Regions)
for the ten consecutive full trading days in which such shares are traded on
the Nasdaq NMS ending at the close of trading on the second full trading day
immediately preceding the Effective Time.
In lieu of receiving any Merger Shares, each holder of Morgan Common Stock
may elect to receive cash consideration for such holder's shares of Morgan
Common Stock. At the Effective Time, such holders shall receive an amount in
cash in respect of each share of Morgan Common Stock that is so converted equal
to $27.00. The aggregate amount of cash that shall be issued in the Merger to
satisfy such elections, together with any other cash amounts to be paid in lieu
of fractional shares issued pursuant to the Merger, shall not exceed 30% (which
may be increased by Regions in its sole discretion to 45%) of the aggregate
consideration paid by Regions in the Merger.
At the Effective Time, all rights with respect to Morgan Common Stock,
pursuant to stock options, stock appreciation rights, or stock awards granted
by Morgan under the existing stock plans of Morgan which are outstanding at the
Effective Time, whether or not exercisable, shall be converted into and become
rights with respect to Regions Common Stock on a basis that reflects the
Exchange Ratio.
Regions is also establishing at the Effective Time a retention bonus pool
consisting of stock options to purchase 5,550,000 shares of Regions Common
Stock to be allocated among key employees of Morgan and its subsidiaries at the
Effective Time. Regions is also entering into employment agreements with five
senior executives of Morgan.
The Merger is intended to constitute a tax-free transaction under the
Internal Revenue Code of 1986, as amended, and be accounted for as a purchase.
Regions contemplates purchasing in privately negotiated transactions or in
the open market all shares of Regions Common Stock to be issued in the Merger,
subject to the satisfaction of all applicable legal requirements.
Consummation of the Merger is subject to various conditions, including:
(i) receipt of the approval by the stockholders of Morgan of the Agreement;
(ii) receipt of certain regulatory approvals from the Board of Governors of the
Federal Reserve System, the National Association of Securities Dealers, Inc.,
certain state regulatory authorities, and certain other regulatory authorities;
(iii) receipt of opinions of counsel as to the tax-free nature of certain
aspects of the Merger; (iv) the effectiveness of a registration statement filed
under the Securities Act of 1933, as amended, to register the Merger Shares;
and (v) satisfaction of certain other conditions.
Regions and Morgan have entered into a termination fee agreement (the
"Termination Fee Agreement") that provides for the payment of a fee by Morgan
to Regions in the amount of $25 million in certain circumstances when the
Merger is not consummated and the Agreement is terminated and Morgan enters
into a business combination with a third party within 12 months after the
termination of the Agreement. Regions and the directors and certain executive
officers of Morgan have also entered into support agreements pursuant to which
such individuals have agreed to vote in favor of the Merger.
The Agreement and the Merger will be submitted for approval at a meeting
of the stockholders of Morgan. Prior to such stockholders meeting, Regions
will file a registration statement with the Securities and Exchange Commission
registering under the Securities Act of 1933, as amended, the shares of Regions
Common Stock to be issued in exchange for the outstanding shares of Morgan
Common Stock. Such shares of stock of Regions will be offered to the Morgan
stockholders pursuant to a prospectus that will also serve as a proxy statement
for the meeting of the stockholders of Morgan.
A copy of a joint news release (the "News Release") relating to the Merger
is being filed as Exhibit 99.1 to this report and is incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The exhibits listed in the exhibit index are furnished as a
part of this current report on Form 8-K.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
REGIONS FINANCIAL CORPORATION
(Registrant)
By: /s/ D. Bryan Jordan
D. Bryan Jordan
Executive Vice President and Comptroller
Date: December 18, 2000
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INDEX TO EXHIBITS
Sequential
Exhibit Page No.
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99.1 Text of News Release, Dated December 18, 2000
issued jointly by Regions Financial Corporation
and Morgan Keegan, Inc.
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Exhibit 99.1
December 18, 2000
REGIONS TO ACQUIRE MORGAN KEEGAN
* Creates leading diversified financial services company in the South
* Excellent strategic fit which accelerates Regions' wealth management strategy
* Morgan Keegan is a premier regional broker-dealer
* Financially attractive
* Low-risk integration
Regions Financial Corp. (NASDAQ: RGBK) and Morgan Keegan, Inc. (NYSE: MOR) today
announced the signing of a definitive agreement under which Regions will acquire
the Memphis based Morgan Keegan. The acquisition will allow Regions to offer a
full range of retail and institutional brokerage and investment banking services
to its customers. Morgan Keegan will maintain its name and operate as a
separate subsidiary of Regions. Allen B. Morgan, Jr., currently Chairman and
Chief Executive Officer of Morgan Keegan, will continue in that capacity and
will join the Board of Directors of Regions.
"This transaction is about better serving our clients and accelerating our long
term earnings growth," Regions' President and Chief Executive Officer, Carl E.
Jones, Jr., explained. "The combined strengths of Regions and Morgan Keegan
coupled with a presence in the same regional markets means that we will be able
to offer our commercial, municipal, retail and private banking clients a broader
range of financial solutions and advisory services to satisfy their financial
needs. Our firms share a common commitment to providing the highest standard of
quality products and services to our regional customer base. I am excited about
the significant potential benefits from this transaction and, based on our
common operating culture and competitive strategies, I am convinced we can
realize them."
Allen Morgan said, "Regions is an ideal partner for Morgan Keegan. Together we
will create the full range financial services company our customers need and
want. Morgan Keegan significantly enhances Regions' retail and institutional
brokerage, fixed income and asset management capabilities and adds equity
capital markets, investment banking and mergers and acquisitions to Regions'
commercial and retail banking, trust, insurance and mortgage banking
businesses. Combining with Regions will provide us with a unique platform,
which comes with being part of a large financial services company. Retaining
our identity as an independent operating subsidiary will set us apart from
other firms and will allow us to maintain our entrepreneurial culture," Morgan
Keegan's CEO concluded.
Under the terms of the agreement, Regions will pay $27.00 per share for each
Morgan Keegan share in a transaction valued at $789 million. In addition,
Regions has established an employee retention pool of 5.55 million stock options
for key employees of Morgan Keegan. Morgan Keegan executive officers and
directors, owning approximately 23% of the Morgan Keegan stock, have agreed to
vote in favor of the merger. Additionally, Regions and Morgan Keegan have
entered into a termination fee agreement under which Regions will receive a fee
of $25 million under certain circumstances in the event the transaction is
terminated.
The merger agreement provides for a tax-free exchange of Regions common shares
for shares of Morgan Keegan. The per share exchange ratio will be based on the
daily volume weighted average trading price per Regions share over the ten
trading days ending two days prior to the closing. In lieu of Regions shares,
Morgan Keegan shareholders may elect to receive $27.00 per share in cash at
closing subject to a maximum of 30% (which may be increased at Regions'
discretion) of Morgan Keegan's shares being exchanged for cash. Based on First
Call consensus estimates, the transaction is expected to be modestly dilutive to
Regions' 2001 earnings per share and accretive thereafter. The transaction will
be immediately accretive to Regions' cash earnings per share. As a result of
this transaction, Regions' non-interest income is expected to rise from
approximately 30% to approximately 40% of total revenue.
Regions' Board of Directors has authorized the Company to repurchase up to 100%
of the shares issued in connection with this transaction. These repurchases will
be in addition to Regions' previously announced repurchase plans. In addition,
Regions may purchase shares of common stock of Morgan Keegan, as well, prior to
consummation of the acquisition.
After the transaction, Morgan Keegan will become Regions' brokerage and capital
markets engine. As a result, Regions will merge its brokerage operations into
Morgan Keegan. This combination will result in a company with 54 offices
operating in 14 states with 961 Series 7 retail and institutional brokers. The
firm will maintain its headquarters in Memphis and the senior management of
Morgan Keegan will manage the combined operations of Morgan Keegan and Regions
Investment Company, Inc. "I am excited at the opportunities afforded Morgan
Keegan by the additional personnel and relationships which will come to our firm
with the merger with Regions" Allen Morgan said. "With our expanded
capabilities and access to Regions' customers, I am confident we can increase
the penetration in our commercial and retail businesses by offering a broader
product array to our joint customer bases," he concluded.
The acquisition, which will be accounted for as a purchase, is expected to close
during the first quarter of 2001, pending Morgan Keegan stockholder approval,
regulatory approval, as well as other customary conditions of closing.
Regions and Morgan Keegan will host a conference call to discuss this
transaction at 10:30 a.m. (Eastern Standard Time) on December 18, 2000.
Investors, analysts and other interested parties may dial in the conference call
at 973-628-7055. In addition, a slide presentation containing information
related to the transaction will be available on Regions' Web site at
http://www.regionsbank.com shortly before the conference call. A replay of the
conference call will be available through January 12, 2001, by dialing
402-220-2922.
Morgan Keegan & Company, Inc. is one of the South's largest investment firms.
Through their 54 offices in 13 states, Morgan Keegan serves individual investors
in the Southern United States and institutional clients throughout the United
States and abroad. With more than 2,000 employees and over $250 million in
equity capital, Morgan Keegan is an established leader in the financial services
industry in the South.
Regions Financial Corporation is a $43.6 billion bank holding company providing
banking services from more than 750 offices in Alabama, Arkansas, Florida,
Georgia, Louisiana, South Carolina, Tennessee and Texas. Regions also provides
banking-related services in the fields of mortgage banking, insurance,
securities brokerage and mutual funds. Regions' common stock is traded in the
Nasdaq National Market System under the symbol RGBK.
Investors and security holders are advised to read the proxy
statement/prospectus regarding the proposed transaction referenced in this press
release when it becomes available, because it will contain important
information. The proxy statement/prospectus will be filed with the Securities
and Exchange Commission by Regions and Morgan Keegan. Security holders may
receive a free copy of the proxy statement/prospectus (when available) and other
related documents filed by Regions and Morgan Keegan at the Commission's website
at http://www.sec.gov. Copies of the proxy statement/prospectus and other
related documents can also be obtained, without charge, by directing a request
to Regions Financial Corporation, 417 N. 20th Street, Birmingham, Alabama 35203,
Attention: Ronald C. Jackson (205-326-7374) or to Morgan Keegan, Inc., Fifty
North Front Street, Memphis, Tennessee 38103, Attention: Joseph C. Weller
(901-524-4100).
Morgan Keegan and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from stockholders of Morgan Keegan
with respect to the transactions contemplated by the merger agreement.
Information regarding such officers and directors is included in Morgan Keegan's
proxy statement for its 2000 annual meeting of stockholders filed with the
Commission on October 20, 2000. This document is available free of charge at
the Commission's website at http://www.sec.gov and/or from Morgan Keegan.
For additional information, visit Regions' Web site at
http://www.regionsbank.com or contact:
Media: For Regions, Kathie B. Martin at 205-326-7188
Investors: For Regions, Ronald C. Jackson at 205-326-7374
Forward-Looking Statements:
The information contained in this press release may include forward-looking
statements that reflect Regions' current views with respect to future events and
financial performance. Regions' management believes that these forward-looking
statements are reasonable, however, you should not place undue reliance on these
statements as they are based only on current expectations and general
assumptions and are subject to various risks, uncertainties, and other factors
that may cause actual results to differ materially from the views, beliefs, and
projections expressed in such statements. Such forward-looking statements are
made in good faith by Regions pursuant to the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995.
The words "believe", "expect", "anticipate", "project", and similar expressions
signify forward-looking statements. Readers are cautioned not to place undue
reliance on any forward-looking statements made by or on behalf of Regions. Any
such statement speaks only as of the date the statement was made. Regions
undertakes no obligation to update or revise any forward-looking statements.
Some factors which may affect the accuracy of our projections apply generally to
the financial services industry, including: (a) the easing of restrictions on
participants in the financial services industry, such as banks, securities
brokers and dealers, investment companies, and finance companies, may increase
our competitive pressures; (b) possible changes in interest rates may increase
our funding costs and reduce our earning asset yields, thus reducing our
margins; (c) possible changes in general economic and business conditions in the
United States and the Southeast in general and in the communities we serve in
particular may lead to a deterioration in credit quality, thereby increasing our
provisioning costs, or a reduced demand for credit, thereby reducing our earning
assets; (d) possible changes in trade, monetary and fiscal policies, laws, and
regulations, and other activities of governments, agencies, and similar
organizations, including changes in accounting standards, may have an adverse
effect on our business; and (e) possible changes in consumer and business
spending and saving habits could have an effect on our ability to grow our
assets and to attract deposits.
Other factors which may affect the accuracy of our projections are specific to
Regions, including: (i) the cost and other effects of material contingencies,
including litigation contingencies; (ii) our ability to expand into new markets
and to maintain profit margins in the face of pricing pressures; (iii) our
ability to keep pace with technological changes; (iv) our ability to develop
competitive new products and services in a timely manner and the acceptance of
such products and services by Regions' customers and potential Regions
customers; (v) our ability to effectively manage interest rate risk, credit risk
and operational risk; (vi) our ability to manage fluctuations in the value of
our assets and liabilities and off-balance sheet exposures so as to maintain
sufficient capital liquidity to support our business; and (vii) our ability to
achieve the earnings expectations related to the businesses that we have
recently acquired or may acquire in the future (including the Morgan Keegan
transaction), which in turn depends on a variety of factors, including: our
ability to achieve in a timely manner anticipated cost savings and revenue
enhancements with respect to acquired operations; the assimilation of acquired
operations to the Regions corporate culture, including the ability to instill
our credit practices and efficient approach to acquired operations; our ability
to retain existing customers and employees of acquired operations; and the
continued growth of the markets that the acquired entities serve, consistent
with recent historical experience.
