As we predicted last night, shares of Bank of America are falling today after it announced that it was acquiring Merrill Lynch. The stock is off around 15 percent this morning. Because the acquisition of Merrill is an all stock transaction, with Merrill shareholders receiving 0.8595 shares of Bank of America for each share of Merrill, the stock movements mean that the market is now pricing the shares of Merrill significantly below the $29 per share first announced. Bank of America is now paying $24.63 for a share of Merrill.
Merrill shares continue to trade at a discount from Bank of America’s, although you have to be cautious about reading too much into merger spreads in all stock deals. This could be a bet on further declines of bank of America stock, or a pricing of risk that the deal will not actually close. Alternatively, it could simply reflect the presence of speculative arbitrage in the market.
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Huh? If you think BofA is overpriced, you short BAC at this point, not MER.
A significant spread vs. the announced ratio implies one and only one thing: The market is pricing in a significant chance the deal does not close as announced. (Otherwise, there would be a straight-up long MER + short BAC arb.)
Why does BOA want a firm of 15,000 secretaries? These guys are order takers and are WORTHLESS!
Why does BOA want a firm of 15,000 secretaries? These guys are order takers and are WORTHLESS!
So…onto another topic.
Why does SKF suck so much?
@2-4, you obviously are a f*cking moron.
My suspicion is that this deal is never meant to close, but rather to stem the waves of shorting as well as bring stability to the market in general.
Everyone knew that MER was next (WaMu isnt big enough to be as concerned about) and this ‘deal’ lets them ride it out.
Has anyone been able to see the covenants if BofA walks?
If it is to close you can be the BofA will be getting some major relief from the Fed/T on the countrywide and MER debt.
-C
@2-4, you obviously are a f*cking moron.
7 Like yr line of though. Don’t see any ML/BAC synergies.
Hasn’t been filed yet. I’m not sure if anything has actually been signed. Just a presentation floating around.
Still need approval of both shareholder groups.
7 may be right, BofA-ML merger most likely won’t close.
@7/11 – BOTH sets of shareholders must approve the deal. will bofa s/h’s take the bait? if the market stablizes, bofa gets a steal; if continues to sour, the press is sure to report the news and s/h’s just say no. perhaps this is the out that let’s people walk away without too many scratches…
Stan O’Neal is so vindicated today.
“How dare you try to sell us to Wachovia?”
tards
Selling to BofA is a lot more acceptable than Wachovia. While both may be Charlotte-based, at least Banc of America Securities is based in NYC, and most of the company’s investment bankers and traders are based there.
@ 5 i hear ya
@13 – very right. Stan O’Neal saw last year the need for access to retail deposits. His board used the canard of “talking to Wachovia without approval” excuse to slam him and fire him. It seems Stan O’neal had the foresight and perhaps if that deal had gone through , MER would be standing stronger today.
question: is there anything, any announcement, any action that boa can take soon that will show us they’re very serious that this will happen? they made the offer in 48 hours, why havent they put up boa signs all over merrill headquarters yet?
otherwise it’s two lead weights tied to each other.