Stifel back in the hunt for Morgan Keegan, say sources

Regions Financial Corp. resumed talks to sell its Morgan Keegan unit to Stifel Financial Corp. after private-equity firms lowered their bids for the brokerage, said two people with knowledge of the matter.

Regions began negotiations again with St. Louis-based Stifel in recent days, the people said, speaking on the condition of anonymity because the discussions are private.

Evelyn Mitchell, a spokeswoman for Regions, declined to comment. A spokeswoman for Stifel didn’t immediately return a call seeking comment.

The news comes just days after sources indicated that buyout firms circling Morgan Keegan brokerage unit had lowered bids by at least $200 million after financing markets deteriorated and MF Global Holdings Ltd. filed for bankruptcy

Thomas H. Lee Partners LP and Jeffrey Greenberg’s Aquiline Capital Partners LLC submitted the highest offer at about $750 million, the people said, asking not to be named because the talks are private. The group topped a joint bid from Carlyle Group LP and Blackstone Group LP (BX), according to the people, who said previous offers valued the unit at more than $1 billion.

The sources said talks between Regions and the PE firms could fall apart as Regions was pushing both groups to raise their price. Regions, based in Birmingham, Alabama, has been planning to use proceeds from the sale to boost capital and pay back a $3.5 billion U.S. bailout. Regions has indicated it plans to collect a $250 million dividend from Morgan Keegan prior to any sale, increasing proceeds from the business, the people said.
–Bloomberg News–