Bank of America announced plans on Sept. 15 to buy investment bank Merrill Lynch for $50 billion in stock, scooping up the Wall Street icon battered by the housing and credit crisis. The deal creates the world's largest financial services company, Bank of America said.
Following the acquisition of Merrill Lynch, Bank of America would have the largest brokerage in the world with more than 20,000 advisers and $2.5 trillion in client assets. It will also give the bank approximately 50% ownership in financial firm BlackRock, which has $1.4 trillion in assets under its management.
Merrill Lynch was seeking a lifeline with its shares tumbling some 78% over the past year on fears of snowballing losses from the subprime real estate meltdown and global credit squeeze.
"This is great news because it gives Merrill shareholders a $12 a share premium and takes out what would have been the next firm to fail," said Peter Cohan of Peter Cohan & Associates. "I am not sure how Bank of America will make the deal pay off, but now attention focuses on the next domino to fall."
Three directors of Merrill Lynch will join the Bank of America board.
Copyright Agence France-Presse, 2008
