Reuters reports that Bank of America (NYSE: BAC) just announced it was withdrawing its interest in Lehman Brothers Holdings Inc. (NYSE: LEH) -- likely sealing Lehman's fate. But it is still interested in buying an investment bank. Now, the Wall Street Journal reports, Bank of America is in pursuit of Merrill Lynch & Co., Inc. (NYSE: MER).
As I posted earlier this afternoon, Bank of America's decision to dump Lehman increases the odds it will file for bankruptcy. But the Journal writes, "Bank of America and Merrill Lynch & Co. Inc. are in merger discussions, according to people familiar with the matter. Much remains uncertain and conditions were fluid."
That is an understatement. But Merrill could be a difficult bull to swallow. As I posted, it has salable assets worth $40 a share and is currently trading at $17. But nobody seems to know how much Merrill's liabilities would subtract from that $40 a share. And when Bank of America is done looking at Merrill, it could reach the same decision it did with Lehman.
Update. DealBook reports that Bank of America could offer $25 to $30 a share for Merrill -- a big premium -- and the deal could be closed by tonight. If so, that would be great news in my humble opinion.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
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Reader Comments (Page 1 of 1)
9-14-2008 @ 5:06PM
william lindblad said...
My you are busy today! BOA & Merrill? Sounds like the banking community is very busy trying to solidify quicksand. This is all starting to sound like "J.P. Morgan and the banks - 1909". Get all involved in the same room and lock the door until all parties involved agree to do what is required to save their respective tails.
Sacrifices will get made to the financial gods and Lehman is on the alter.
Hey!, after the 1909 fiasco we got the Fed! That was supposed to preventive medicine for the future. Disease mutated.
Maybe we should call in the CDC? It does look like a pandemic is starting.
No wonder the Germans are getting upset.