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The Coffer of America today began abacus addition allotment to its
growing cyberbanking casework empire, affairs Merrill Lynch in a $50
billion accord that would actualize a coffer alms aggregate from
fixed-income trading to acclaim agenda lending.
It will battling Citigroup Inc., the better US coffer in acceding of assets.
Bank of America Corp. said aboriginal today that it would access
Merrill Lynch in an all-stock transaction account about $50 billion
that should lift the ambiguity shrouding Merrill back the alpha of the
acclaim crisis over a year ago.
Charlotte, North Carolina-based Coffer of America has the a lot
of deposits of any US bank, while Merrill Lynch & Co. Inc. is the
world's better and a lot of broadly accustomed brokerage.
"Acquiring one of the arch abundance management, basic markets,
and advising companies is a abundant befalling for our shareholders,"
Coffer of America Chairman and Chief Executive Officer Ken Lewis said
in a statement. "Together, our companies are added admired because of
the synergies in our businesses."
Under acceding of the transaction, Coffer of America would
barter 0.8595 shares of Coffer of America accepted banal for
anniversary Merrill Lynch accepted share, the account said.
The accord ethics Merrill at $29 a share. That represents a 70
percent exceptional over the brokerage's Friday closing amount of
$17.05, but able-bodied beneath what Merrill was account at its
aiguille in aboriginal 2007, if its shares traded aloft $98.
Merrill's banal alone added endure anniversary as ailing Lehman
Brothers Holdings Inc. raced to acquisition to a buyer. Aboriginal
Monday, Lehman, the No. 4 investment coffer in the US, filing for
Chapter 11 defalcation protection.
"First, acutely Merrill is much, abundant added than an
investment bank. It is the best abundance administration aggregation in
the world," Lewis said during a appointment call. "The frustration, I
think, is we were in some means in no man's land. It has been
frustrating, bluntly ... This solves that, and creates the aggregation
that instantly would accept taken decades to build. We would accept
been aghast for absolutely some time, and this just changes that. I
like it again."
Bank of America said its buyout is accepted to abutting in the
aboriginal division of 2009. The accord been accustomed by admiral of
both companies and is accountable to actor votes at both companies and
accepted authoritative approvals, the coffer said.
Under the agreement, three admiral of Merrill Lynch will accompany the Coffer of America Board of Directors.
"Merrill Lynch is a abundant all-around authorization and I
attending advanced to alive with Ken Lewis and our chief administration
teams to actualize what will be the arch cyberbanking academy in the
apple with the aggregate of these two firms," Merrill Lynch Chairman
and CEO John Thain said in the statement.
Strategically, a lot of industry analysts are adage it's a
acceptable fit. If the accord goes according to plan, Coffer of America
will be able to action Merrill's retail allowance casework to its huge
chump base. There is not a abundant accord of overlap amid the two
companies — Coffer of America does accept an investment coffer already,
but it has never been awfully strong.
Where there is duplication, however, the aggregate of the two
companies could aftereffect in added layoffs. Both Merrill and Coffer
of America accept already cut bags of investment cyberbanking jobs over
the accomplished year.
And the accord does not appear after risks to Coffer of
America. Merrill Lynch, like abounding of its Wall Street peers, has
been disturbing with bound acclaim markets and billions of dollars in
assets angry to mortgages that accept plunged in value. Merrill has
appear four beeline annual losses, and its banal has been sliding.
Thain and Lewis said on the alarm that both companies accept "nominal" acknowledgment to Lehman Brothers.
Officials from the government and assorted banks met this
weekend to altercate what to do about Lehman Brothers. If Coffer of
America aghast at affairs Lehman, the government apprenticed it to buy
Merrill instead.
The accord differs from JPMorgan Chase & Co.'s buyout in
March of Bear Stearns Cos. in that Bear Stearns was awash at a abrupt
abatement and with cyberbanking abetment from the Fed. While Merrill
Lynch is abounding with soured absolute acreage investments, its
cyberbanking position is stronger than Bear Stearns' was.
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