Raymond James Financial Inc said on Wednesday it agreed to acquire Southeast investment bank and brokerage Morgan Keegan from Regions Financial Corp for $930 million in stock, concluding a drawn-out auction for the unit.

For Raymond James, it was the largest acquisition it has ever made and a chance to expand both its brokerage and capital markets business at a bargain price.

"We prefer organic growth, but this is a once-in-20-years opportunity," Raymond James Chief Executive Paul Reilly told Reuters.

Regions Financial, eager to raise capital to repair a balance sheet battered by the financial crisis, will also receive a $250 million dividend before the closing, which is expected to come in the first quarter of this year.

The acquisition adds about 1,000 advisers to St. Petersburg, Florida-based Raymond James' U.S. brokerage force, which had roughly 5,400 advisers.

With approximately 6,000 brokers, Raymond James would be one of the largest U.S. wealth management firms, vaulting past rival Stifel Financial though still trailing national powerhouses such as Morgan Stanley Smith Barney and Bank of America's Merrill Lynch.

In one fell swoop, Raymond James and its $256 billion in client assets will grow by $80 billion, moving it from ninth to seventh in client assets among U.S. brokerages.

Yet the merger's success will depend on Raymond James convincing employees of Morgan Keegan to stick around. Dozens of Morgan Keegan brokers have already departed in the past year since Regions Financial announced in June it was seeking a buyer for the unit.

"The swing factor will be broker retention" said JMP Securities brokerage analyst David Trone.

Regions has been trying to sell Morgan Keegan, a move that could help it repay $3.5 billion it owes the U.S. government in 2008 bank-bailout aid.

The auction of Morgan Keegan, based in Memphis, Tennessee, has seen a series of twists and turns, as both rivals and private equity firms made bids but then backed away as markets convulsed. Amid the uncertainty, Morgan Keegan brokers began to slip away.

Raymond James says it paid 1.3 times book value for Morgan Keegan and less than 1 times annual revenue, which Trone said was a "reasonable" price.

Reilly said the purchase would be neutral to Raymond James 2012 earnings, but in subsequent years boost profit by 2 to 3 percent, not assuming improvement in interest rate spreads or a rebound in capital markets activity.

"We'll be well positioned when the markets turn around," he said.

That said, brokerage mergers seldom come together without a hitch. Star brokers and bankers often bolt for new firms, and overlapping businesses can sometimes clash. Analysts note that Raymond James and Morgan Keegan each has an extensive presence in the Southeast, creating more overlap.

Jim Parrish, a former president of Morgan Keegan's private client group who left the firm last year, said brokers will be watching which branch managers are retained after the merger.

"If their (branch manager) survives, that goes a long way toward keeping those (advisers)," Parrish said. "If they don't, it impacts their situation."

Reilly in the interview said Morgan Keegan advisers will remain in their offices and keep their managers. Raymond James already has multiple offices in some cities.

"There's no reason why the two (networks) can't overlap," said Reilly.

Alan Reed, financial services recruiter and vice president of Michael King Associates in New York, said there is likely to be duplication in back office operations between the two firms.

"There's a feeling that a lot of people in Memphis are going to lose their jobs," he said.

To address those concerns, Raymond James said Memphis will be the headquarters of its fixed income and municipal bond businesses, and also host a regional support center.

SALE ADDS TO REGIONS' CAPITAL; TO POST CHARGE

Regions said the transaction purchase price is subject to the closing tangible equity of Morgan Keegan and the retention of Morgan Keegan employees in the immediate post-closing period.

Regions also will indemnify Raymond James for all litigation matters before the merger.

Morgan Keegan Asset Manage ment and Regions Morgan Keegan Trust, as announced last year, are not included in the sale and will stay part of Regions' wealth management group.

As part of the sale, Regions said it expects to record an impairment charge between $575 million and $745 million in the fourth quarter. The bank said it expects to record a net loss available to common shareholders in the period of between $432 million to $633 million.

The sale will add to the bank's Tier 1 Common capital base at a time that the largest U.S. banks, including Regions, are undergoing stress tests by the Federal Reserve.