BofA Acquires Merrill Lynch in $50B Deal
Wednesday, September 17, 2008
Although Bank of America backed out of a deal to save investment bank Lehman Brothers from bankruptcy over the weekend, the corporation is still shaking up the financial community with an announcement this morning that it has agreed to acquire Merrill Lynch & Co., Inc. in a $50 billion all-stock transaction.
According to John Thain, chairman and CEO of Merrill Lynch, Merrill Lynch's global presence will propel Bank of America to the top of the financial pecking order, making it “the leading financial institution in the world.”
The combined company will have leadership positions in retail brokerage and wealth management, Bank of America said in a statement to the press. By adding Merrill Lynch’s more than 16,000 financial advisers, Bank of America will have the largest brokerage in the world with over 20,000 advisers and $2.5 trillion in client assets, the company said. With this acquisition, Bank of America will also gain 50 percent ownership in Merrill Lynch's investment management firm BlackRock, which has $1.4 trillion in assets. Bank of America currently has $589 billion in investment management assets.
According to Bank of America's statement, adding Merrill Lynch both enhances current strengths at Bank of America and creates new ones, particularly outside of the United States. Merrill Lynch adds strengths in global debt underwriting, global equities, and global merger and acquisition advice, the company said. After the acquisition, Bank of America will be the number one underwriter of global high yield debt, the third largest underwriter of global equity, and the ninth largest adviser on global mergers and acquisitions based on pro forma first half of 2008 results, Bank of America explained.
“Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders,” Bank of America chairman and CEO Ken Lewis said. “Together, our companies are more valuable because of the synergies in our businesses.”
Over the last decade, Bank of America has initiated a series of strategic acquisitions that have elevated its position to that of a financial powerhouse. In 2003, Bank of America bought FleetBoston Financial for $48 billion, making it the largest retail bank in the United States, with the most branches, customers, and checking accounts of any bank in the nation. In 2005, it became the biggest credit card issuer with the purchase of MBNA for $35 billion. And in January of 2008, Bank of America agreed to pay approximately $4 billion in stock to acquire Countrywide Financial, saving the troubled lender from bankruptcy brought on by the subprime mortgage crisis and making Bank of America the nation's largest mortgage originator and servicer.
Bank of America's acquisition of the 94-year old Merrill Lynch not only makes it one of the largest financial institutions in the world, but positions Bank of America as one of the financial sectors' primary saviors in this downward economic spiral.
The Bank of America-Merrill Lynch transaction is expected to close in the first quarter of 2009. It has been approved by directors of both companies but is subject to shareholder votes and standard regulatory approvals.
According to John Thain, chairman and CEO of Merrill Lynch, Merrill Lynch's global presence will propel Bank of America to the top of the financial pecking order, making it “the leading financial institution in the world.”
The combined company will have leadership positions in retail brokerage and wealth management, Bank of America said in a statement to the press. By adding Merrill Lynch’s more than 16,000 financial advisers, Bank of America will have the largest brokerage in the world with over 20,000 advisers and $2.5 trillion in client assets, the company said. With this acquisition, Bank of America will also gain 50 percent ownership in Merrill Lynch's investment management firm BlackRock, which has $1.4 trillion in assets. Bank of America currently has $589 billion in investment management assets.
According to Bank of America's statement, adding Merrill Lynch both enhances current strengths at Bank of America and creates new ones, particularly outside of the United States. Merrill Lynch adds strengths in global debt underwriting, global equities, and global merger and acquisition advice, the company said. After the acquisition, Bank of America will be the number one underwriter of global high yield debt, the third largest underwriter of global equity, and the ninth largest adviser on global mergers and acquisitions based on pro forma first half of 2008 results, Bank of America explained.
“Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders,” Bank of America chairman and CEO Ken Lewis said. “Together, our companies are more valuable because of the synergies in our businesses.”
Over the last decade, Bank of America has initiated a series of strategic acquisitions that have elevated its position to that of a financial powerhouse. In 2003, Bank of America bought FleetBoston Financial for $48 billion, making it the largest retail bank in the United States, with the most branches, customers, and checking accounts of any bank in the nation. In 2005, it became the biggest credit card issuer with the purchase of MBNA for $35 billion. And in January of 2008, Bank of America agreed to pay approximately $4 billion in stock to acquire Countrywide Financial, saving the troubled lender from bankruptcy brought on by the subprime mortgage crisis and making Bank of America the nation's largest mortgage originator and servicer.
Bank of America's acquisition of the 94-year old Merrill Lynch not only makes it one of the largest financial institutions in the world, but positions Bank of America as one of the financial sectors' primary saviors in this downward economic spiral.
The Bank of America-Merrill Lynch transaction is expected to close in the first quarter of 2009. It has been approved by directors of both companies but is subject to shareholder votes and standard regulatory approvals.
