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By John Poirier and Elinor Comlay
WASHINGTON/NEW YORK (Reuters) - Bank of America has agreed to acquire Merrill Lynch & Co, according to people briefed on the matter, in a deal that will give the U.S. bank the world's largest brokerage.
The deal came after a weekend of tense negotiations over Lehman Brothers Holdings, which late Sunday teetered on the brink of liquidation, triggering concern that market participants would lose faith in other investment banks.
A Merrill Lynch spokeswoman declined comment and a Bank of America spokesman could not immediately be reached for comment.
"It catapults Bank of America into positions of strength in three businesses where they were weak," said James Ellman, portfolio manager at hedge fund Seacliff Capital."
"Now Bank of America has one of the best and largest retail brokerages in the country, one of the top investment banks in the world, and a large stake in one of the best investment managers in the world," Ellman said.
Bank of America is paying $29 a share price, a 70 percent premium to Merrill's share price on Friday, although Merrill's shares were trading at $50 in May and over $90 at the beginning of January 2007.
Stuck with some of the same toxic debt -- much of it mortgage-related -- that torpedoed Lehman's balance sheet, Merrill has been hit hard by the credit crisis and has written down more than $40 billion over the last year.
Last month, Thain arranged to sell over $30 billion (16.6 billion pounds) in repackaged debt securities to Dallas-based private equity firm Lone Star Funds for 22 cents on the dollar. Continued...
WASHINGTON/NEW YORK (Reuters) - Bank of America has agreed to acquire Merrill Lynch & Co, according to people briefed on the matter, in a deal that will give the U.S. bank the world's largest brokerage.
The deal came after a weekend of tense negotiations over Lehman Brothers Holdings, which late Sunday teetered on the brink of liquidation, triggering concern that market participants would lose faith in other investment banks.
A Merrill Lynch spokeswoman declined comment and a Bank of America spokesman could not immediately be reached for comment.
"It catapults Bank of America into positions of strength in three businesses where they were weak," said James Ellman, portfolio manager at hedge fund Seacliff Capital."
"Now Bank of America has one of the best and largest retail brokerages in the country, one of the top investment banks in the world, and a large stake in one of the best investment managers in the world," Ellman said.
Bank of America is paying $29 a share price, a 70 percent premium to Merrill's share price on Friday, although Merrill's shares were trading at $50 in May and over $90 at the beginning of January 2007.
Stuck with some of the same toxic debt -- much of it mortgage-related -- that torpedoed Lehman's balance sheet, Merrill has been hit hard by the credit crisis and has written down more than $40 billion over the last year.
Last month, Thain arranged to sell over $30 billion (16.6 billion pounds) in repackaged debt securities to Dallas-based private equity firm Lone Star Funds for 22 cents on the dollar. Continued...
