The deal for Merrill Lynch by Bank of America is said to be of 50 billion dollars, of which 44 billion dollars will be used for buying the common shares of ML, while remaining 6 billion USD will be set for the options, convertibles, and restricted stock units. Bank of America said it expects to achieve $7 billion in pretax expense savings, fully realized by 2012, and expects the deal to be accretive to earnings by 2010. The transaction is expected to close in the first quarter of next year.
This deal gives a valuation of 29 dollar a share for Merrill Lynch stocks, and that represents a staggering premium of 70% or so on the closing share price of Merrill on Friday. Though the ML shares have seen the highs of $90 during the begining of the year. The deal is learnt to be approved by the directors of both the companies. So another wall street bank is set to vanish from the street.
Merril Lynch Job Cut: 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.
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