Merrill Lynch sold in $50bn deal
Posted by admin on 15 September, 2008 under Business news | 
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Bank of America is to buy Merrill Lynch in a deal worth $50bn (£28bn) that will create a new financial giant.
The deal came amid a hectic weekend on Wall Street, with Lehman Brothers announcing that it would file for bankruptcy protection.
There were worries that Merrill would be the next bank to lose the confidence of investors as it has been hit hard by bad mortgage debt.
Merrill has written down more than $40bn of assets in the past year.
Under the terms of the deal, Bank of America will pay about $29 for each Merrill share.
While that represents a 70% premium to the closing share price on Friday, Merrill’s share price stood at $50 in May and was above $90 at the start of 2007.
‘Great opportunity’
“Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders,” said Bank of America chairman and chief executive Ken Lewis said in a statement.
“Together, our companies are more valuable because of the synergies in our businesses.”
The deal will also see three Merrill Lynch directors join the board of Bank of America.
“Merrill Lynch is a great global franchise and I look forward to working with Ken Lewis and our senior management teams to create what will be the leading financial institution in the world with the combination of these two firms,” said John Thain, Merrill’s chairman and chief executive.
The deal – which is expected to be completed early next year – has been approved by directors of both companies, but now will need the approval of shareholders and regulators.
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