Is Merrill shopping its Bloomberg stake?

Since early May, the share price of Merrill Lynch & Co. (NYSE: MER) has plunged, going from $52 to $31.12. Basically, various Wall Street analysts have turned negative on the company as there may be a need to seek more capital to deal with write-downs.

Of course, a strategy to deal with this is to unload some key assets. In fact, according to a piece in the New York Times, it looks like Merrill is trying to sell off its 20% stake in Bloomberg LP.

It was in the early 1980s that Merrill Lynch invested $30 million in Bloomberg. And since then, Bloomberg has become a global powerhouse in financial analytics. Currently, its community comprises about 250,000 subscribers.

As for Merrill Lynch, it looks like its negotiations are in the first stages -- such as with putting out feelers and sending out pitch books.

Yet, it's never easy to sell a minority position. After all, such a stake provides little control. Moreover, it's tough to resell the position. Keep in mind that Michael Bloomberg still owns 72% of the firm.

Plus, he has a right of first refusal on any purchase. This is a powerful tool and is likely to diminish the ultimate valuation of a possible deal. In other words, the logical buyer for the 20% stake is likely to be Michael Bloomberg himself.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.