The world has come riding to the rescue of Wall Street this winter, with sovereign wealth funds and similar government investment vehicles providing much needed cash infusions to banks and brokerages. Merrill Lynch got a Christmas present of $4.4 billion from Singapore’s Temasek and another $1.2 billion from Davis Selected Advisors. The details of the original announcement were pretty sketchy—lots of vague talk about financial and strategic benefits but very little financial details
Yesterday Temasek revealed some of the details in a filing with the Securities and Exchange Commission. Here’s the filing. And fortunately Matt Koppenheffer has done the math so we don’t have to.
According to the filing, Temasek now owns 91.7 million shares of Merrill stock. Based on the announced $4.4 billion initial investment from Temasek, the deal was priced at $48 per share -- an 11% discount to the stock price on the day of the announcement and an 8% discount from yesterday's price.
So Temasek started out with an 11% discount and now it’s down to an 8% discount. If John Thain is able to keep Merrill’s stock plummeting like it has been, eventually he may be able to bring Temasek’s investment up to par. It’s the new Wall Street math.
Temasek SEC Filing [SEC]
The Cost of Cash for Merrill [Motley Fool]