On Thursday, regional banker KeyCorp announced that, in order to raise cash to repurchase shares of its common stock (which the company believes to be undervalued), KeyCorp is selling its investment management subsidiary Victory Capital Management and its broker dealer affiliate Victory Capital Advisers (together, "Victory") to private equity buyer Crestview Partners, for $246 million in cash and debt.
Crestview will pay $201 upfront, and sign a "seller note" agreeing to pay KeyCorp a further $45 million at face value.
In a statement, KeyCorp Chief Executive Officer Beth E. Mooney described the move as helping the company to "focus" on its "core relationship banking model." The company also said it expects to record an after-tax gain on the sale of anywhere from $145 million to $155 million. The sale is expected to close in Q3 2013.
At a valuation of 2.2 times sales, KeyCorp is selling Victory at a slight premium to its own shares' 2.16 price-to-sales valuation. Nonetheless, investors are subtracting 0.3% from KeyCorp's share price today, as the stock falls to $9.32.
The article KeyCorp Selling Victory Capital Management originally appeared on Fool.com.
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