MEGA MERGER: BofA-Merrill

Bank of America Corp. has reportedly agreed this evening to buy Merrill Lynch & Co. for about $44 billion, or around $29 a share, according to The Wall Street Journal. This is a mega deal at the height of the market's credit crisis-induced hysteria and as Lehman Brothers appears headed for bankruptcy. Is BofA-Merrill a good deal or not? How does this recast the nation's largest bank and what does it mean for the other top banks in the U.S.? Is BofA paying too much for an Merrill, when other investment banks -- even large IBs -- have seen massive value haircuts as a result of the credit crisis?

Tags: bank-of-america, credit-crisis, merrill-lynch

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Permalink Reply by JJ Hornblass on September 15, 2008 at 9:24am: The official deal PowerPoint is located here.; ▶ Reply to This

Permalink Reply by Michael Gibb on September 15, 2008 at 11:24am: If I were John Thaine, I'd be doing the Dance of Joy today in my office. That BofA would agree to pay such an exorbitant sum for Merrill in today's market is a great win for the investment bank's shareholders.

I think BofA's timing was top-notch, but this deal should have been able to get done for far less than $44 billion. Merrill stock was traded at a low of $16.60 a share on Friday; the $29 share price represents a 150% premium.

BofA has proven to be very opportunistic in snatching the nation's largest mortgage lender and one of the nation's largest investment banks in seemingly less time than it took for "Obama Girl" to go from fad to has-been.; ▶ Reply to This

Permalink Reply by JJ Hornblass on September 15, 2008 at 11:29am: I agree. Right now it appears as though BofA overpaid. Additionally, the fact that BofA is now on rating watch for possible downgrade by Moody's is another less-than-savory fallout from this deal.; ▶ Reply to This

Permalink Reply by Alan Ellison on September 15, 2008 at 6:05pm: Hard to believe that BAC took this on on top of Countrywide. Certainly have to wonder about their commitment to retail banking; ▶ Reply to This

Permalink Reply by JJ Hornblass on September 15, 2008 at 6:21pm: Absolutely, particularly since there is nothing "clean and neat" about the Countrywide acquisition for BAC.

Here's a thought. One of my colleagues, Mary Wisniewski, attended the BAC-Merrill press conference today and there was an interesting tidbit she picked up. Apparently, Ken Lewis said Merrill would not be integrated into BAC until early 2010, implying what seems to me to be a longer-than-usual integration of Merrill. Perhaps BAC is not "taking this on" just yet, but rather sharing its balance sheet with Merrill for the time being? Just a thought.; ▶ Reply to This

Permalink Reply by JJ Hornblass on October 2, 2008 at 9:13am: Thain to Run Investment-Banking Operations at Bank of America; ▶ Reply to This

Permalink Reply by Victoria Fierson on October 23, 2008 at 11:53am: Bank of America will launch a new Global Banking, Securities and Wealth Management leadership team after the Merrill Lynch deal is complete. BofA will use some of their team members and Merrill's
to oversee the new company's infrastructure.

Former Merrill CEO, and new President of the BofA/Merrill merge, John Thain, says "With these talented individuals and others who will be announced as we move forward I am more than ever convinced that we will be the world's premier financial services company." Read the rest of the article here; ▶ Reply to This