Bank of America Corp. today officially announced that it is buying brokerage and investment bank Merrill Lynch & Co. Inc. in a $50 billion all-stock transaction that further expands the reach of the nation's biggest consumer bank.
"Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders," Bank of America chief executive Ken Lewis said in a statement. "Together, our companies are more valuable because of the synergies in our businesses."
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Merrill Lynch CEO John Thain said he looks forward to working with Lewis to create a “leading financial institution in the world.”
Under the deal, Charlotte-based Bank of America would offer .8595 shares of Bank of America common stock for each Merrill Lynch common share.
The bank expects to reap $7 billion in pre-tax expense cuts by 2012. The acquisition will contribute to Bank of America earnings in 2010.
The sale, expected to close in the first quarter, has been approved by both boards. It needs approval of both companies' shareholders and of regulators. Three Merrill Lynch directors would join Bank of America's board.
The combined company would have the world's largest force of stock brokers, with more than 20,000 financial advisers with $2.5 trillion in client assets. Bank of America would also gain Merrill's 50 percent ownership of money manager BlackRock Inc., which has $2.5 trillion in assets under management. Bank of America has $589 billion in assets under management.
In investment banking, Merrill gives Bank of America a more global flavor and improves its standing in debt and stock underwriting as well as in merger advice. The bank said the combined firm would be No. 1 in global high-yield debt, No. 3 in global stock underwriting and No. 9 in global merger advice, according to results through the first half of this year.
More details will be released during an 8 a.m. conference call for investors and at a 10 a.m. news conference at Bank of America's New York headquarters, One Bryant Park.