B of A Takeover of Merrill A Done Deal (Almost)

In a rushed bid to ride out the storm sweeping American finance, 94-year-old Merrill Lynch & Co. agreed late Sunday to sell itself to Bank of America Corp. for roughly $44 billion, WSJ is reporting.

However, WSJ added this caveat:

As of Sunday evening, a deal had not yet been signed, said people briefed on the discussions. And other last-second bidders could emerge from the woodwork. Yet with news of the Bank of America talks breaking Sunday, it became all the more difficult for Merrill and Mr. Thain to rebuff a deal. Should the talks collapse, most on the Street were expecting Merrill's shares to fall even further amid widespread worries about independent broker-dealers.

WSJ then quotes analyst Nancy Bush at NAB Research LLC in Annandale, N.J:

"Why would Bank of America do this?" said analyst Nancy Bush at NAB Research LLC in Annandale, N.J. "Ken Lewis always likes to buy the biggest thing he can. So why not this? You are master of the universe, basically."...

"I think John Thain at Merrill is the ultimate realist," Ms. Bush said, the analyst, who expected federal regulators to bless the deal by relaxing deposit limits for bank-holding companies. "He knows if Lehman goes under he is not far behind. He wants to cut the best deal he can."

I have to agree completely with the Bush take on the situation. Do note,closely, though, this part of the report: "Ms. Bush said, the analyst, who expected federal regulators to bless the deal by relaxing deposit limits for bank-holding companies..." Not only has this crisis proven beneficial to B of A by the fact it gets to by Mother Merrill at a crisis discount price, but, without the crisis, this deal couldn't even have been done because of federal regulations that set deposit limits for bank holding companies. These crises always create opportunities for the real operators. B of A is obviously among them.

-Robert Wenzel