Merrill Lynch acquired by Bank of America

by Gill Montia

Story link: Merrill Lynch acquired by Bank of America

Merrill Lynch is being acquired by Bank of America Corp. for around $44 billion.

As Wall Street faced a weekend of crisis talks centred on a rescue package for Lehman Brothers, Merrill agreed to an all share deal in which Bank of America will pay $29 a share for the world’s biggest brokerage.

Bank of America had been a front runner with Barclays to rescue Lehman Brothers but both parties walked away from discussions, apparently unable to extract guarantees over Lehman’s toxic debt from the US Government.

The offer for Merrill values the firm above its closing share price on Friday of last week but compares with a high of $97.53 per shares in January 2007.

As with Lehman Brothers, which is today filing for bankruptcy protection, Merrill’s exposure to the US sub-prime crisis via its mortgage-backed securities has been called into question.

The acquisition, which is expected to close in the first quarter of 2009, will bolster Bank of America’s retail banking operations.

It will also up Bank of America’s stakes in the merger advisory business, placing it among the top 10 revenue earners in the sector on Wall Street.