Published: Tuesday September 16, 2008
Bank of America is to buy Merrill Lynch in a deal worth US$50 billion that will create a new financial giant.
The deal came amid a hectic weekend on Wall Street, with Lehman Brothers announcing that it would file for bankruptcy protection.
There were worries that Merrill would be the next bank to lose the confidence of investors as it has been hit hard by bad mortgage debt.
Merrill has written down more than US$40 billion of assets in the past year.
Under the terms of the deal, Bank of America will pay about US$29 for each Merrill share.
While that represents a 70 per cent premium to the closing share price on Friday, Merrill’s share price stood at US$50 in May and was above US$90 at the start of 2007.
‘Great opportunity’
“Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders,” said Bank of America chairman and chief executive Ken Lewis said in a statement.
Shares in Merrill Lynch rose 26 per cent at US$4.44 in late morning trade, while Bank of America saw its stock fell 14.2 per cent at US$28.94.
The deal will also see three Merrill Lynch directors join the board of Bank of America.
The deal—which is expected to be completed in the first quarter of 2009—has been approved by directors of both companies, but now will need the approval of shareholders and regulators.
Source: Trinidad Guardian Newspapers
http://www.guardian.co.tt/business3.html
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