Bank of America to Buy Merrill Lynch for $44 Billion

 

By Binyamin Appelbaum

Washington Post Staff Writer
Sunday, September 14, 2008; 9:59 PM

Bank of America has struck a $44 billion deal to buy Merrill Lynch, according to two people familiar with the negotiations, a merger that will unite the nation's largest consumer bank with one of its most celebrated investment banking firms.

Both boards have approved the deal and it is now being reviewed by lawyers, the sources said. Bank of America will pay about $29 for each share of Merrill Lynch stock. A formal announcement is expected tomorrow morning.

Bank of America is in a position to buy Merrill Lynch because until now the Charlotte company has been a bit player on Wall Street. Instead it runs the nation's largest retail bank, a business that remains highly profitable. That now gives it the money to go shopping for an investment bank, continuing a long tradition of opportunistic acquisitions.

In buying Merrill Lynch, Bank of America is taking a pass on Lehman Brothers, in which it initially expressed interest. But Lehman is far more troubled and Merrill Lynch offers Bank of America a far more attractive franchise, people familiar with the company's thinking said.

Merrill Lynch's crown jewel is the nation's largest retail brokerage. Bank of America views that business as a good addition to its own consumer financial businesses. The company already was the nation's largest retail bank, credit card company and mortgage lender. Now it will become the nation's largest retail brokerage too. Arguably no other American company sits closer to the heart of the consumer economy.

For Bank of America, which is based in Charlotte, Merrill Lynch also offers the prestige of owning one of the nation's great investment banks. Bank of America has struggled to build its own operation. Chief Executive Ken Lewis declared last fall that he had "all the fun I can stand," as he announced that the company would slow its efforts to grow its own investment bank.