Fed Approves BoA's Acquisition of Merrill: Ramifications?

Includes: BAC, MER
by: Ron Haruni

On Wednesday, the Federal Reserve governing board announced its approval of the buyout of Merrill Lynch (MER) by Bank of America (NYSE:BAC).

The acquisition of New York-based Merrill Lynch, one of the premier wealth management and advisory companies, allows BoA to create a unique financial services firm. Merrill has total consolidated assets of approx. $875 billion and controls deposits of nearly $78 billion, which represent 1.1% of the total amount of deposits of insured depository institutions in the country. Bank of America, with total consolidated assets of $1.8 trillion, remains, on consummation of the proposal, the largest depository organization in the U.S., with total consolidated assets of approx. $2.7 trillion.

BoA agreed to acquire Merrill Lynch on Sept. 15, in a $50 billion or $29/share, all-stock transaction, after the firm’s sharp decline in share price pressured the company to find a merger partner as its liquidity began to dissipate rapidly.

The combining of the two companies creates a firm unrivaled in its breadth of financial services and global reach. By adding Merrill’s more than 16,000 financial advisers, BoA now has the largest brokerage in the world with more than 20,000 advisers.

Charlotte, N.C.-based Bank of America expects to close the transaction by the end of current fiscal year, pending shareholder and additional regulatory approvals.

Disclosure: None

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