Bank of America Takes Over Merrill Lynch

Bank Of America Corporation has agreed to acquire Merrill Lynch & Co. Inc for US $ 44 Billion in a deal, that will give the US Bank the world’s largest brokerage. Recently Merrill had been hit hard by the Credit Crisis & has written down more than US $40 Billion. Bank of America is paying US $ 29 a share price, 70 % premium to Merrill’s share price on 12.09.2008, although Merrill’s shares were trading at US$ 50 in May and over US$ 90 at the beginning of June2007.The deal had been approved in the last year by the Directors of both the Companies. Merrill Directors will join the Bank Of America Board. It is quite likely that after this Take Over, the Market Participants will gradually lose interest in other Investment Banks.

Contributed By:

Prof. Jayanta Mitra

(Globsyn Business School)