CHARLOTTE (September 15, 2008) -- Bank of America Corporation today announced it has agreed to acquire Merrill Lynch & Co., Inc. in a $50 billion all-stock transaction that creates a company unrivalled in its breadth of financial services and global reach.
"Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders,” Bank of America Chairman and Chief Executive Officer Ken Lewis said. “Together, our companies are more valuable because of the synergies in our businesses.”
"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, chairman and CEO of Merrill Lynch.
Under terms of the transaction, Bank of America would exchange .8595 shares of Bank of America common stock for each Merrill Lynch common share. The price is 1.8 times stated tangible book value.
Bank of America expects to achieve $7 billion in pre-tax expense savings, fully realized by 2012. The acquisition is expected to be accretive to earnings by 2010.
The transaction is expected to close in the first quarter of 2009. It has been approved by directors of both companies and is subject to shareholder votes at both companies and standard regulatory approvals.
Under the agreement, three directors of Merrill Lynch will join the Bank of America Board of Directors.
The combined company would have leadership positions in retail brokerage and wealth management. By adding Merrill Lynch’s more than 16,000 financial advisers, Bank of America would have the largest brokerage in the world with more than 20,000 advisers and $2.5 trillion in client assets.
The combination brings global scale in investment management, including an approximately 50 percent ownership in BlackRock, which has $1.4 trillion in assets under management. Bank of America has $589 billion in assets under management.
Adding Merrill Lynch both enhances current strengths at Bank of America and creates new ones, particularly outside of the United States. Merrill Lynch adds strengths in global debt underwriting, global equities and global merger and acquisition advice.
After the acquisition, Bank of America would be the number one underwriter of global high yield debt, the third largest underwriter of global equity and the ninth largest adviser on global mergers and acquisitions based on pro forma first half of 2008 results.
Bank of America was advised by J.C. Flowers & Co. LLC, Fox-Pitt Kelton Cochran Caronia Waller and Bank of America Securities. It was represented by Wachtell, Lipton, Rosen & Katz. Merrill Lynch was represented by Shearman & Sterling.
Temasek will make over US$1.5 bn on their investment.
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Merrill Lynch & Co Inc. is a holding company that provides investment, financing, insurance and related services to individuals and institutions on a global basis through its broker, dealer, banking, insurance and other financial services subsidiaries. On September 29, 2006, Merrill Lynch completed the merger of its Merrill Lynch Investment Managers (MLIM) business with BlackRock, Inc. (BlackRock) (the BlackRock merger). The Company owns a 45% voting interest and approximately half of the economic interest of BlackRock.
NEW YORK, December 5, 2008 – Merrill Lynch & Co., Inc. (NYSE: MER) announced that Bank of America’s acquisition of Merrill Lynch was approved today at its special stockholders meeting along with two other related proposals. Under the terms of the transaction, which was announced on September 15, 2008, Merrill Lynch stockholders will receive 0.8595 of a share of Bank of America common stock for each share of Merrill Lynch common stock held immediately prior to the merger and Merrill Lynch & Co., Inc. will become a wholly-owned subsidiary of Bank of America Corporation. The acquisition is expected to close...
NEW YORK, October 16 – Merrill Lynch (NYSE: MER) today reported a net loss from continuing operations for the third quarter of 2008 of $5.1 billion, or $5.56 per dilutedshare, compared with a net loss from continuing operations of $2.4 billion, or $2.99 perdiluted share, for the third quarter of 2007. Merrill Lynch’s net loss for the third quarterof 2008 was $5.2 billion, or $5.58 per diluted share, compared with a net loss of $2.2billion, or $2.82 per diluted share, for the year-ago quarter.Third quarter 2008 net revenues were $16 million, driven by a number of significantitems, including:• Net write-downs...
CHARLOTTE (September 15, 2008) -- Bank of America Corporation today announced it has agreed to acquire Merrill Lynch & Co., Inc. in a $50 billion all-stock transaction that creates a company unrivalled in its breadth of financial services and global reach."Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders,” Bank of America Chairman and Chief Executive Officer Ken Lewis said. “Together, our companies are more valuable because of the synergies in our businesses.”"Merrill Lynch is a great global franchise and I look forward to working with Ken Lewis and our...
Merrill Lynch issued the following press statement:NEW YORK, July 28 – Merrill Lynch today announced a series of actions to significantly reduce the company’s risk exposures and further strengthen itscapital position. These actions include:• Announced substantial sale of U.S. super senior ABS CDO(1) securities, resulting in an exposure reduction of $11.1 billion from June 27, 2008• Agreement to terminate ABS CDO hedges with monoline guarantor XL Capital Assurance Inc. (“XL”) and settlement negotiations with other monolinecounterparties• Plans to issue new common shares with gross proceeds of approximately $8.5 billion through a public offering launched today (excluding a fifteen percent, orapproximately...
NEW YORK, July 17 – Merrill Lynch (NYSE: MER) today reported a net loss from continuing operations for the second quarter of 2008 of $4.6 billion, or $4.95 per diluted share, compared to net earnings from continuing operations of $2.0 billion, or $2.10 per diluted share, for the second quarter of 2007. Merrill Lynch’s net loss for the second quarter of 2008 was $4.7 billion, or $4.97 per diluted share, compared to net earnings of $2.1 billion, or $2.24 per diluted share, for the year-ago quarter. Second quarter 2008 results included a restructuring charge of $445 million pre-tax ($286 million...
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Recent Events -Merrill Lynch
Full Year Loss and Recapitalisation
On 17 January 2008, Merrill Lynch reported a net loss from continuing operations of US$ 8.6 billion for the full year 2007.The results were dramatically impacted by net write-downs in the 2nd half of 2007 of US$ 19.4 billion relating to U.S. ABS CDOs and US sub-prime residential mortgages.In addition to the write-downs, credit valuation adjustments of US$ 2.6 billion relating to hedges with financial guarantors on U.S. ABS CDOs were recorded in the final quarter.
Significant Failures
The recently appointed Chairman and Chief Executive, John Thain, has been explaining to analysts and investors that the profit hit was caused by a number of significant failures including poor risk management on the trading desks, the increased siloing of the business over the last few years with not enough control from the top, lack of collaboration across the firm, insufficient management of the balance sheet and an inappropriate incentive scheme.He has announced significant initiatives to address these issues including new senior hires, a weekly across the firm risk management meeting, a more focused allocation of risk and an incentive plan firmly based on overall company performance and a greater proportion of incentives to be paid to employees in the form of stock.
Capital Raising
The company has raised additional capital through a US$ 6.6 billion mandatory convertible preferred stock issue in the form of a private placement mainly to the Korean Investment Corporation, the Kuwait Investment Authority and Mizuho Corporate Bank, This was in addition to the US$ 6.2 billion private placement of newly issued common stock to Temasek Holdings and Davis Selected Advisors.
Executive Compensation
Shareholders are obviously upset that the stock price has fallen by around 40% over the last year.In addition, many have expressed concern that the previous Chairman and Chief Executive, who presided over many of the above listed failures, has been allowed by the Board to resign with an estimated final compensation package of US$ 160 million.
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