Is Merrill Lynch 'Practically Giving It Away'?

Dec.24.07 | About: Merrill Lynch (MER)

If you lived in the Northeast in the early 1980s, you may remember the commercials for electronics retailer Crazy Eddie, where the actor would say their prices are so insane that 'they're giving it away.' After reading the terms of Merrill Lynch's (MER) deal with Singapore's Sovereign Wealth Fund, Temasek, some investors think someone at MER is doing their own Crazy Eddie impersonation.

As news surfaced Monday morning that MER had closed on the $4.4 bln cash infusion, shares traded up over $2 to more than $58 per share. However, in the initial press release, MER never mentioned the terms of the deal, and now we know why. Under the disclosed terms, MER is selling the shares at a price of $48 per share, a full 17% below where the stock was trading earlier this morning.