Bank of America Buys Merrill in $50 Billion Deal
On Sunday Bank of America agreed to purchase Merrill Lynch for .8595 shares of BAC for each share of MER.
Investors, wary of regulatory and due diligence hurdles before the deal is finalized, largely stayed on the sidelines, leaving quite a spread between BAC and MER share prices until Monday’s close. Merrill was up about 15%, while Bank of America shares fell 20% on the day.
Bank of America, still digesting it’s $4 billion appetizer, Countrywide, seems to be at risk of overeating, at least until the full weight of Countrywide’s debt has been revealed.
The deal will be dilutive of Bank of America stock, which explains CEO Kenneth Lewis’ elation.
With bankruptcy of Lehman Brothers and the JP Morgan purchase of Bear Stearns, only Goldman Sachs and Morgan Stanley remain among the U.S. five top independent brokers.