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Vote Set For Today On Buyout Of Merrill Lynch

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The Associated Press

Published: December 5, 2008

CHARLOTTE, N.C. - When shareholders vote on Bank of America Corp.'s acquisition of Merrill Lynch & Co. today, they are expected to transform the bank into a business befitting its name and change the face of Wall Street.

The shotgun deal, valued at $50 billion when it was announced in September, will create the nation's largest financial services company. It comes at the cost of independence for one of Wall Street's greatest institutions and is yet another sign that the era of big investment banks ruling the financial universe is over.

"The I-bank model is gone," Keefe, Bruyette & Woods analyst Jefferson Harralson said. "This vote is a visible piece of the changing world."

The deal, struck as the solvency of investment banks was in grave doubt, has kept Merrill from a complete meltdown like the one suffered by Lehman Brothers Holdings, which was forced to file for bankruptcy.

It also prevented the company from being sold at fire-sale prices, as Bear Stearns Cos. was in March.

The acquisition enables Bank of America to expand the financial services it offers its already huge customer base, and gives Merrill the protection and limits on risk that it needs to survive.

Analysts say the deal will help reshape the banking industry.

"No management team historically has pulled off the universal banking model and has done it well," said Tony Plath, a finance professor at the University of North Carolina at Charlotte. "This management team has the opportunity to change the industry in ways that nobody has done before."

The deal calls for Bank of America to exchange 0.8595 shares of Bank of America common stock for each Merrill Lynch common share.

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