The Hindu Business Line : BankAm to buy Merrill Lynch for $ 50 billion

Bank of America has the most deposits of any U.S. bank, while Merrill Lynch is the world's largest and most widely recognized brokerage. A combination of the two is expected to create a global financial service behemoth involved in everything from fixed-income trading to stock underwriting to credit cards, which could rival Citigroup Inc., arguably the biggest US bank in terms of assets.

Under terms of the transaction, Bank of America would exchange .8595 shares of Bank of America common stock for each Merrill Lynch common share, an official release said. The price is 1.8 times the stated tangible book value, it said.

The transaction is expected to close in the first quarter of 2009, the statement said. It has been approved by directors of both companies and is subject to shareholder votes at both companies and standard regulatory approvals.

Under the agreement, three directors of Merrill Lynch will join the Bank of America Board of Directors.

Strategically, most industry analysts are saying it's a good fit. If the deal goes according to plan, Bank of America will be able to offer Merrill's retail brokerage services to its huge customer base.

The deal differs from JPMorgan Chase & Co.'s buyout in March of Bear Stearns Cos. in that Bear Stearns was sold at a steep discount and with financial backing from the Fed. While Merrill Lynch is burdened with soured real estate investments, its financial position is stronger than Bear Stearns' was.

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