Merrill CEO making right moves: Win Smith

Merrill Lynch Chief Executive Officer John Thain poses before a news conference in Mumbai, May 7, 2008.

NEW YORK (Reuters) - Winthrop Smith Jr, son of a founding partner of Merrill Lynch & Co Inc MER.N, told Reuters on Tuesday that Merrill Chief Executive John Thain is "making many of the right moves."

Merrill said late Monday it is selling $8.5 billion in shares after agreeing to unload $30.6 billion in repackaged debt at a deep discount.

In an interview, Smith said, "While it's a tough pill to swallow, and it's created a lot of dilution, I think it has created some good clarity."

Smith, who worked at Merrill for nearly thirty years and was a member of the bank's executive management committee, said the raising of capital and the asset sale will "allow the market to focus on the fundamentals of Merrill which are really pretty good."

Thain is refocusing Merrill on its traditional businesses, Smith said, adding, "The fundamental franchise is really pretty good."

The additional investment by Singapore's state-run Temasek Holdings Pte Ltd TEM.UL is also a positive for Thain and the bank, Smith said, because Temasek is known for being a long-term investor. "That's a great shareholder to have right now," he said.

Merrill shares fell 1 percent to $24.11 on the New York Stock Exchange.

(Reporting by Elinor Comlay; editing by Jeffrey Benkoe)