Bank of America Corp. has agreed to acquire Merrill Lynch & Co. Inc. in a $50 billion all-stock transaction. According to Bank of America, this acquisition ‘creates a company unrivalled in its breadth of financial services and global reach.’
Under terms of the transaction, Bank of America would exchange .8595 shares of Bank of America common stock for each Merrill Lynch common share. The price is 1.8 times the stated tangible book value.
Bank of America expects to achieve $7 billion in pre-tax expense savings, fully realized by 2012. The acquisition is expected to be accretive to earnings by 2010.
The transaction is expected to close in the first quarter of 2009. It has been approved by directors of both companies and is subject to shareholder votes at both companies and standard regulatory approvals. Under the agreement, three directors of Merrill Lynch will join the Bank of America board of directors.
The combined company would have leadership positions in retail brokerage and wealth management. By adding Merrill Lynch's more than 16,000 financial advisors, Bank of America says it would have the largest brokerage in the world – with more than 20,000 advisors and $2.5 trillion in client assets.
Source: Bank Of America