UPDATE 3-H&R Block to sell consulting unit for $610 mln
* To sell RSM McGladrey to McGladrey & Pullen LLP
* Will finance about $65 mln of sales price
* To take $0.17/shr charge in Q1 (Adds analyst quote, updates share movement)
BANGALORE, Aug 23 (Reuters) - H&R Block Inc plans to sell its consulting unit to McGladrey & Pullen LLP for about $610 million, as the top U.S. tax preparer looks to jettison the underperforming division and focus on its core business.
H&R Block will finance about $65 million of the deal value as it looks to push through the sale of RSM McGladrey.
The company, which was created by Henry Bloch and his brother Richard in 1946 with $5,000 borrowed from an aunt, had acquired RSM McGladrey in 1999 to move beyond filing tax returns, but in recent years has stepped back on this strategy.
After a successful proxy battle by hedge fund manager Richard Breeden in 2007, the company began to cut non-core operations like subprime lending and financial advisory to return to its roots.
In June, H&R Block's new Chief Executive William Cobb told analysts that RSM's falling profit and revenue were a drag on the company's earnings, and that the unit and its troubles were on his "radar screen."
"(The sale) should improve overall corporate margin, as Tax Services margin in FY11 was 27.1 percent and RSM McGladrey's was 9.3 percent," Oppenheimer analyst Scott Schneeberger said in a note to clients.
H&R Block expects to record a non-cash charge of about $53 million, or 17 cents a share, in the first quarter related to the sale and the closure of some RSM's operations not included in the deal.
Shares of the Kansas City, Missouri-based company were up 4 percent at $14 on Tuesday on the New York Stock Exchange. (Reporting by Jochelle Mendonca in Bangalore; Editing by Roshni Menon, Viraj Nair)
- Missing jet may have strayed toward Andaman Sea: Malaysian air force |
- Malaysia military source says missing jet veered to west |
- Toddler found with heroin at New Jersey daycare center
- Special Report: How China's official bank card is used to smuggle money |
- Ukraine appeals to the West as Crimea turns to Russia |