Merrill Lynch to Be Bought By BofA for $29 a Share
Merrill Lynch, the world’s largest broker, agreed to be acquired by Bank of America for $29 a share, or $43.5 billion, after being pressured into a deal by federal regulators.
Merrill agreed to the BofA sale, which represents a huge premium to its closing price on Friday of $17 a share, after talking to several other potential acquirers, including Morgan Stanley.
Morgan turned down a possible acquisition because it couldn’t examine Merrill’s books in 48 hours, a person close to the matter said.
Merrill plans to make an internal announcement to employees sometime between 8 and 9 am Monday morning.
Merrill came under pressure to find a merger partner came after its liquidity began “evaporating” Friday and the firm became worried about a sharp decline in share price on Monday, according to people inside the firm.
Merrill is expecting huge job losses with the merger. The brokerage division will stay intact, but there will be large-scale reductions in workforce. CEO John Thain is also expected to leave.
Lehman Brothers Plans to File for Bankruptcy Shortly
CNBC has confirmed press reports that Lehman Brothers is likely to file for bankruptcy protection as soon as Sunday evening.
Among details to be worked out: the accounting treatment for certain derivatives and repurchase positions, an area not currently covered by bankruptcy laws; and the orderly netting out of a variety of securities positions to which Lehman Brothers is contractually obligated.
Federal authorities are expected to be involved in the orderly disposition of Lehman assets if such a filing occurs. Sources knowledgeable about the weekend deliberations tell CNBC that without some government participation in the process, a bankruptcy filing by Lehman Brothers would cause major disruptions in the financial system.
Officials at the Federal Reserve and U.S. Treasury are taking steps to mitigate risk to the system and assure the orderly functioning of the markets tomorrow.
AIG, Facing Liquidity Crunch, Reaches Out to Regulator
Insurer American International Group, working to stave off rating downgrades and shore up the capital of its holding company, has made an unprecedented approach to the Federal Reserve seeking short-term financing, media reports said.
Chief Executive Robert Willumstad has reached out to the Fed late on Sunday, according to the Wall Street Journal.
The Fed normally oversees monetary policy and supervision of banks, AIG was seeking the funds as a temporary measure and planned to repay the Fed with the proceeds from asset sales.
AIG officials did not immediately respond to requests for comment.
The company, until recently the world’s biggest insurer by market capitalization, has been attempting to hammer out an emergency strategic plan after its shares fell nearly 50 percent last week on fears it faced a liquidity crisis.
And now we are hearing of another interest rate cut. As if this situation wasn’t scary enough.
Who’s taking bets on the Amero showing up sooner rather than later?