* 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 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)