According to various news outlets, Bank of America reached a deal to buy Merrill Lynch for $29 a share. At $44 billion, Merrill would be sold at about two-thirds of its value of one year ago, and half its all-time peak value of early 2007.
The two financial giants were first reported to be in talks about a possible merger by the Wall Street Journal yesterday. The merger agreement was confirmed in an article in today’s on-line journal.
Bank of America had considered buying Lehman Brothers Holdings Inc., but pulled out of that deal and considers Merrill Lynch to be a better fit, the Journal said on its Web site, citing people familiar with the matter.
BOA has the most deposits of any U.S. bank, while Merrill Lynch is the world’s largest brokerage. A combination of the two would create a global banking giant to rival Citigroup Inc. – the biggest U.S. bank in terms of assets.
Major banks and brokerages met this weekend with government officials to try to formulate a rescue of Lehman. However, with no government financial support, banks were reluctant to make an acquisition. According to another on-line journal article, Lehman is poised to declare bankruptcy absent an eleventh hour rescue. The financial markets are prepared for a down opening as the rumours Lehman may fail has sent new fears about the health of the U.S. banking and financial markets.
If you have questions about your options for recovering losses related to the turmoil in the credit markets, please contact the law offices of Colling, Gilbert, Wright & Carter. Thank you.