Regions Financial Corp. (NYSE: RF) and AmSouth Bancorporation (NYSE: ASO) announced Thursday that they have agreed to merge, forming one of the top 10 bank holding companies in the United States.
Both banks have a major presence in Chattanooga. AmSouth earlier acquired the longtime local institutions of Pioneer Bank and First Federal Savings and Loan.
The new company will have almost $140 billion in assets, hold nearly $100 billion in deposits and operate 2,000 branches in 16 states across the South, Midwest and Texas. Combined, the two companies employ 37,000 people. The Regions name will be retained.
Jackson W. Moore, 57, chairman, president and chief executive officer of Regions, will be chairman of the combined company. C. Dowd Ritter, 58, chairman, president and chief executive officer of AmSouth, will be the president and chief executive officer of Regions.
The combined company will have leading positions in some of the fastest growing markets in the United States as well as a broad, balanced mix of businesses including retail and commercial banking, trust and asset management, securities brokerage, mortgage and insurance services, officials said.
“AmSouth shares Regions’ passion for delivering superior customer service, and the combined company will be in an excellent position to raise service standards,” said Mr. Moore. “Our companies have similar goals, shared values and solid experience in putting organizations together. We will take a deliberate, methodical approach to integrating our companies, making certain that customers continue to receive high quality service.
“I am confident the new Regions will emerge as the leading regional financial services provider, delivering superior shareholder returns on a consistent basis.”
“Combining AmSouth and Regions creates a company with market-leading positions in some of the best markets in the country,” said Mr. Ritter.
“These companies complement each other in many ways, and together, led by one of the strongest management teams in the business, we will have an even greater ability to deliver superior service to our customers. All of that translates to a greater opportunity for increased shareholder value. The appeal of this combination by every measure – strategically, financially or operationally – is extraordinary.”
The agreement provides for a stock-for-stock merger in which 0.7974 shares of Regions will be exchanged, on a tax-free basis, for each share of AmSouth common stock. Based upon closing stock prices of both companies on May 24, 2006, the proforma combined market capitalization of the new institution would be approximately $26 billion.
As part of the transaction, it currently is expected that the new company will initially pay a dividend of 35 cents per share per quarter, which is the current Regions quarterly dividend rate and represents an increase of approximately 7 percent for AmSouth shareholders. All dividends are subject to applicable law and the discretion of the applicable company’s board of directors.
The boards of directors of Regions and AmSouth will be combined to form a consolidated board of directors that will leverage the expertise and talent of both companies. Regions and AmSouth also have designated other key members of the new company's senior management team. Reporting to Moore will be R. Alan Deer, general counsel and corporate secretary and Allen B. Morgan Jr., chairman of Morgan Keegan and head of financial services, which includes Regions Insurance Group. Reporting to Ritter will be O.B. Grayson Hall Jr., head of business lines; Richard D. Horsley, head of transaction and integration; D. Bryan Jordan, chief financial officer; Samuel E. Upchurch Jr., head of the general bank; and William C. Wells II, chief risk officer.
Reporting to Horsley will be David B. Edmonds, head of human resources and David C. Gordon, head of operations and technology. Reporting to Morgan will be G. Douglas Edwards, president and CEO of Morgan Keegan & Company Inc.
The combined company expects to realize cost savings of $400 million pre-tax. Approximately $150 million of this benefit is expected to be realized in 2007, and the full run rate of cost savings is expected to be achieved by spring 2008. The expected annual cost savings represent approximately 10 percent of the combined operating expense base. The combined company expects to incur restructuring costs of approximately $700 million pre-tax.
In connection with the merger agreement, the companies entered into customary reciprocal 19.9 percent stock option agreements.
Advisors to Regions included Merrill Lynch, Morgan Keegan and Wachtell, Lipton, Rosen & Katz. Advisors to AmSouth were Goldman Sachs and Sullivan & Cromwell.
About Regions Financial Corporation
Regions Financial Corporation (NYSE: RF), headquartered in Birmingham, Ala., is a full-service provider of retail and commercial banking, trust, securities brokerage, mortgage and insurance products and services. Regions had $84.6 billion in assets as of March 31, 2006, making it one of the nation’s top 15 banks. Regions’ banking subsidiary, Regions Bank, operates some 1,300 offices and a 1,600-ATM network across a 16-state geographic footprint in the South, Midwest and Texas . Its investment and securities brokerage, trust and asset management division, Morgan Keegan & Company Inc., provides services from over 300 offices.
About AmSouth
AmSouth is a regional bank holding company with $53 billion in assets, more than 680 branch banking offices and 1,200 ATMs. AmSouth operates in Florida, Tennessee, Alabama, Mississippi, Louisiana and Georgia. AmSouth is a leader among regional banks in the Southeast in several key business segments, including consumer and commercial banking, small business banking, mortgage lending, equipment leasing, and trust and investment management services.
Regions And AmSouth: The Merger at a Glance
Merging Regions and AmSouth creates a top 10 bank holding company and provides scale, breadth and diversification that will enhance shareholder value.
This strategic combination will provide long-term benefits for shareholders by creating a Southeast-based banking powerhouse with a broad and balanced mix of business for sustained growth.
The merger benefits our 5 million households by providing a broader range of products and services and the opportunity to bank at any of 2,000 branches and 2,800 ATMs in 16 states.
Deal Terms:
Name: Regions Financial Corporation
Headquarters: Birmingham, Ala.
Chairman: Jackson W. Moore
CEO: C. Dowd Ritter
Exchange ratio: 0.7974 Regions shares for each 1.0 AmSouth share
Anticipated closing: Fourth quarter 2006
Regions
AmSouth
Combined Company
Total assets1
$84.6 billion
$52.9 billion
$137.5 billion
Annual revenue (FTE basis) 2
$4.7 billion
$2.5 billion
$7.2 billion
Market capitalization3
$16 billion
$10 billion
$26 billion
Households
3 million
2 million
5 million
FTE employees1
24,928
11,690
36,618
Deposits1
$60.5 billion
$37.1 billion
$97.6 billion
Loans1
$58.5 billion
$36.7 billion
$95.2 billion
Full service offices1
1,312
644
1,956
ATMs1
1,586
1,228
2,814
Financial advisors1
1,070
270
1,340
Notes:
1 As of 3/31/06
2 FYE 12/31/05
3 Based on 5/24/06 closing stock prices
Combined numbers do not take into account planned divestitures or purchase accounting
Key businesses:
Retail banking, Commercial banking, Trust, Private banking, Asset management, Brokerage, Investment banking, Mortgage and Insurance.
Additional Information
The proposed Merger will be submitted to Regions Financial’s and AmSouth’s stockholders for their consideration. Regions Financial will file a registration statement, which will include a joint proxy statement/prospectus to be sent to each company’s stockholders, and each of Regions Financial and AmSouth may file other relevant documents concerning the proposed Merger with the SEC. Stockholders are urged to read the registration statement and the joint proxy statement/prospectus regarding the proposed Merger when they become available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. You will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about Regions Financial and AmSouth, at the SEC’s Web site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, by accessing Regions Financial’s website (http://www.Regions.com) under the tab “Investor Relations” and then under the heading “SEC Filings”, or by accessing AmSouth’s Web site (http://www.amsouth.com) under the tab “About AmSouth,” then under the tab “Investor Relations” and then under the heading “SEC Filings.”
Regions Financial and AmSouth and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Regions Financial and/or AmSouth in connection with the proposed Merger. Information about the directors and executive officers of Regions Financial is set forth in the proxy statement for Regions Financial’s 2006 annual meeting of stockholders, as filed with the SEC on April 5, 2006. Information about the directors and executive officers of AmSouth is set forth in the proxy statement for AmSouth’s 2006 annual meeting of stockholders, as filed with the SEC on March 16, 2006. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed Merger when it becomes available. You may obtain free copies of these documents as described above.