Regions Financial Corp. (NYSE:RF) (Regions) and Union Planters
Corp. (NYSE:UPC) (Union Planters) have signed a definitive merger
agreement, creating the 12th largest bank holding company nationwide
in terms of deposits.
The new company, which will be known as Regions Financial
Corporation, "will offer its 5.1 million customers greater value and
convenience through an expanded branch and ATM network and a wide
array of services and products in retail, small business, private and
corporate banking; asset and wealth management; and securities
brokerage," officials said.
Upon completion of the transaction, Regions will have total
deposits of $56 billion across a 15-state network of 1,400 banking
branches, 1,700 ATMs, and over 140 brokerage offices. The new company
will enjoy the No. 1 market position in the combined mid-South region
of Alabama, Arkansas, Georgia, Louisiana, Mississippi and Tennessee.
In addition, the company will have meaningful positions in surrounding
high growth markets with significant opportunity for investment. The
combined company, with total assets of $81 billion and a market
capitalization of $14 billion, and its banking operations will be
headquartered in Birmingham. Morgan Keegan, as well as the combined
mortgage business, will be headquartered in Memphis.
"The combination of our two companies will create a new regional
force in the banking and financial services industry and further our
respective strategic objectives," said Carl E. Jones Jr., chairman,
president and chief executive officer of Regions. "We believe this
combination presents broader and deeper choices for our customers and
expanded opportunities for our associates, as well as significant
benefits for shareholders of both companies.
"We will enjoy a powerful combination of high-return, low-risk
markets where we have leading market shares, a strong presence in
high-growth and high-potential markets, and the leading securities
brokerage company in the South," he said.
Jackson W. Moore, chairman, president and chief executive officer
of Union Planters, agreed, adding, "Although we will be creating one of the largest financial services companies in the United States, this
combination is bigger than just the numbers.
"Success in mergers goes beyond size - success is about an unwavering focus on customers, associates and communities," Moore said. "I am proud to say that both Union Planters and Regions share this focus as part of our similar business models and complementary corporate cultures. Success is also about taking appropriate advantage of market opportunities, and we see significant opportunity to leverage our complementary business lines across a larger customer and geographic base.
"Customers will be our top priority, and we will select the best
people, products and technology from both companies to provide our
customers with the best service and value possible," Moore said. "We
believe this is the best way to position the combined company for
further growth and to create shareholder value."
Terms of the agreement call for the formation of a new holding
company named Regions Financial Corporation. In the transaction, each
share of Union Planters common stock will be converted into one share
of the new company stock and each share of Regions common stock will
be converted into 1.2346 shares of the new company common stock. The
transaction is expected to close in mid 2004, subject to customary
regulatory and shareholder approvals.
As part of the transaction, the new company intends to pay a cash
dividend of $0.3334 per share per quarter, which is the current Union
Planters dividend rate. Consistent with this rate, Regions has
declared a special cash dividend of $0.0816 per share payable on April
1, 2004, to shareholders of record on March 18, 2004. This dividend
will be in addition to Regions' recently declared cash dividend of
$0.33 per share announced on Jan. 22, 2004, resulting in a total
quarterly cash dividend of $0.4116 per share. Regions intends to
maintain the dividend rate of $0.4116 per share per quarter until the
transaction is completed.
The combination is expected to be cash accretive to shareholders
of both companies in 2004 and at least 5 percent cash accretive in
2005. In addition, the transaction is expected to be GAAP accretive to
shareholders of both companies in 2005. The financial projections for
2005 anticipate that only 60 percent of the projected cost savings
will have been realized. The companies expect the merger integration process to be completed during 2006.
"We will approach the integration
carefully and intelligently so that we can ensure as seamless a
transition as possible," Jones said.
The combined company expects to realize annual cost savings of
$200 million pre-tax. This represents 7 percent of the combined operating expense base. In addition, the combined company expects to incur restructuring costs of approximately $300 million pre-tax.
Jones, 63, of Regions, will be chief executive officer of the combined
company until his planned retirement in June 2005, when he will be
succeeded as CEO by Moore, 55, of Union Planters. Until such time as
he becomes chief executive officer, Moore will be the president of
Regions. Jones will remain chairman of the board through June 2006, at
which time Moore will assume the additional role of chairman. The
boards of directors of Regions and Union Planters will be combined to
form a consolidated board of directors that will leverage the
expertise and talent of both companies' current boards, each of which has 13 members.
Regions and Union Planters have also designated other key members
of the new company's senior management team, which includes Richard D. Horsley, vice chairman and chief operating officer; Allen B. Morgan Jr., vice chairman and chairman of the board of Morgan Keegan; D. Bryan Jordan, chief financial officer; Robert A. Goethe, chairman of mortgage banking; and Bobby L. Doxey, senior executive vice president.
Doxey and Horsley will co-lead the transition team.
Moore will oversee the consolidated banking operations, and major banking product lines, and will have the combined companies' six
regional bank presidents reporting to him: Jack Fleischauer, Adolfo
Henriques, Peter Miller, Steven Schenck, Samuel Upchurch and John
White Jr.
Union Planters intends to redeem its outstanding Series E convertible preferred stock as soon as practicable. These securities
will remain convertible for common stock until the redemption. The
transaction is expected to close in mid 2004 and is subject to customary shareholder and regulatory approvals. The merger has been unanimously approved by the boards of directors of both companies.
Each party has agreed to pay a termination fee under certain
circumstances. Regions was represented by UBS Investment Bank and
Sullivan & Cromwell LLP. Union Planters was represented by Morgan
Stanley and Wachtell, Lipton, Rosen & Katz.
About Regions Financial Corporation
Regions, headquartered in Birmingham, Ala., is a full-service
provider of banking, securities brokerage, mortgage and insurance
products and services. As of Dec. 31, 2003, Regions had $48.6 billion
in assets and shareholders' equity of $4.5 billion. Its banking
subsidiary, Regions Bank, operates more than 680 offices across a
nine-state geographic footprint in the South and Texas. Its securities
brokerage subsidiary, Morgan Keegan, provides investment and brokerage
services from more than 140 offices. Additional information about
Regions, which is a member of both the Forbes and Fortune 500, can be
found at www.Regions.com.
About Union Planters
Union Planters Corporation, Memphis, Tenn., with total assets of
$31.9 billion at Dec. 31, 2003, is the largest bank holding company in
Tennessee and among the 25 largest bank holding companies in the
United States. Union Planters Bank, National Association, the
principal banking subsidiary, was founded in 1869 and operates
branches in 12 states: Alabama, Arkansas, Florida, Illinois, Indiana,
Iowa, Kentucky, Louisiana, Mississippi, Missouri, Tennessee and Texas.
Union Planters offers a full range of commercial and consumer financial solutions through a network of 717 banking offices, 925 ATMs and the resources of specialized business units. Trust services include investment management, personal trust services, employee benefit administration and proprietary mutual funds. Investment and insurance services include annuities, brokerage, life insurance, title
insurance and debt cancellation on consumer lending products. Union
Planters Mortgage provides a full range of mortgage products through
Union Planters banking centers and a network of mortgage production
offices in 20 states. Capital Factors, Inc., based in Boca Raton,
Fla., provides receivable-based commercial financing and related
fee-based credit, collection and management information services.
Capital Factors has regional offices in Atlanta, Ga.; Charlotte, N.C.;
Dallas, Texas; Los Angeles, Calif.; and New York, N.Y. Strategic
Outsourcing, Inc., based in Charlotte, N.C. provides professional
employment services such as payroll administration, tax reporting,
compliance, workers' compensation, insurance and benefits management.
Union Planters Corporation's common stock is traded on the New York
Stock Exchange under the symbol UPC and is included in the Standard
and Poor's 500 Index, the Standard and Poor's 500 Regional Banks
Index, the Standard and Poor's 500 Financials Index, the NYSE Composite Index and the Russell 1000 Index.