Destroyer of Ignorance
By Zachary R. Mider
Jan. 1 (Bloomberg) -- Merrill Lynch & Co.’s 95-year run as an independent company is coming to an end as Bank of America Corp. completed its acquisition of the broker for about $33 billion in stock.
Bank of America, the biggest U.S. home lender, closed the purchase today, the Charlotte, North Carolina-based company said in a PRNewswire statement. Scana Corp., South Carolina’s biggest utility owner, will replace New York-based Merrill Lynch in the Standard & Poor’s 500 Index.
Merrill Lynch was founded by Charles E. Merrill in January 1914 and evolved into the world’s biggest brokerage, with an army of 17,000 financial advisers. After more than $50 billion of losses and writedowns tied to the collapse of the U.S. subprime mortgage market, Merrill agreed in September to a sale, escaping the fate of bankrupt Lehman Brothers Holdings Inc.
Bank of America, led by Chief Executive Officer Kenneth Lewis, 61, plans to cut 30,000 to 35,000 positions from the combined companies in the next three years because of the merger and a weak U.S. economy. Merrill CEO John Thain, 53, will remain as president of investment banking, trading and brokerage.
Bank of America rose 84 cents, or 6.3 percent, to $14.08 yesterday in New York Stock Exchange composite trading, valuing Merrill shares at $12.10 in the stock-for-stock exchange. That’s 88 percent less than their high of $97.53 in January 2007.
Bank of America, announcing the merger on Sept. 15, valued the deal at about $50 billion. The transaction size has declined since then, as the bank’s share price tumbled 47 percent.
Bank of America plans on issuing 1.71 billion common shares, worth $24.1 billion at the current price, and replacing Merrill’s preferred shares with 359,000 new Bank of America preferred shares, it said in an Oct. 29 regulatory filing. Merrill’s preferred equity was $8.6 billion as of Sept. 26, the brokerage said in a regulatory filing.
To contact the reporter on this story: Zachary R. Mider in New York at [email protected]
Last Updated: January 1, 2009 09:15 EST