UPDATE 1-NEWSMAKER-Bank of America CEO Lewis wins Merrill

Mon Sep 15, 2008 1:46pm EDT

(Adds Lewis comments, details)

By Jonathan Stempel

NEW YORK, Sept 15 (Reuters) - Kenneth Lewis' seven-year tenure at the helm of Bank of America Corp (BAC.N) has been marked by big, audacious, complicated acquisitions.

Buying Merrill Lynch & Co MER.N may top them all.

"This was the strategic opportunity of a lifetime," Lewis told reporters at a news conference.

The $50 billion all-stock acquisition followed less than two days of negotiations, which sprung from the banking industry's efforts to address problems affecting the stricken investment bank Lehman Brothers Holdings Inc LEH.N.

Buying Merrill cements Lewis' reputation as one of the most aggressive acquirers in corporate history, with more than $150 billion of acquisitions.

In that sense, the 61-year-old executive has proven a worthy successor to Hugh McColl. Acquisitions engineered by McColl, known as "Huge" for his dealmaking, included the $43.1 billion purchase in 1998 of BankAmerica by his NationsBank, which created Bank of America.

"The Merrill acquisition meets three of Ken Lewis' key requirements for acquisitions: brand, scale, and best-in-class franchise," wrote Oppenheimer & Co analyst Meredith Whitney.

Assuming no problems with antitrust regulators, the addition of Merrill would turn Charlotte, North Carolina-based Bank of America into a behemoth.

Bank of America was already the nation's biggest retail bank, credit card issuer, home equity loan provider and, after buying Countrywide Financial Corp in July, mortgage provider.

Adding Merrill will make the bank the largest U.S. brokerage, with more than 20,000 financial advisers and $2.5 trillion of client assets.

It will also give Bank of America a far bigger investment bank, less than a year after trading losses led Lewis to say he had had "all of the fun I can stand in investment banking."

Lewis later said he regretted that comment because it raised a question about his commitment to the business.

But with the addition of Merrill, "I actually do like the business at this scale," he said on Monday.

Wealth management assets would also soar, and Bank of America would assume Merrill's roughly 45 percent stake in BlackRock Inc (BLK.N), the powerful asset manager.

"It catapults Bank of America into positions of strength in three businesses where they were weak," said James Ellman, a portfolio manager at SeaCliff Capital in San Francisco.

The purchase comes just 11 weeks after Lewis paid $2.5 billion for Countrywide. The quick turnaround suggests Lewis believes he can handle credit losses at both Countrywide and Merrill.

Bank of America is the second-largest U.S. bank by assets, with about $1.9 trillion. With Citigroup Inc (C.N) downsizing, Bank of America would become the largest U.S. bank by far.

MERGERS AND MORE MERGERS

Arguably, the Merrill purchase could also bolster Lewis' reputation as something of a savior for the financial system -- though in buying Merrill, he spurned Lehman, which filed for bankruptcy protection on Monday.

Jamie Dimon, who runs JPMorgan Chase & Co (JPM.N), won praise earlier this year in agreeing to swallow Bear Stearns Cos rather than let that Wall Street bank collapse.

Lewis, born on April 9, 1947, in Meridian, Mississippi, obtained his finance degree from Georgia State University and joined Bank of America predecessor NCNB Corp in 1969 as a credit analyst.

He became Bank of America's chief executive in April 2001, and two and a half years later announced his first purchase, shelling out $48 billion for northeast regional bank FleetBoston Financial Corp.

Nearly everyone thought he overpaid. Yet that purchase, which closed in April 2004, is now considered a success.

The next big merger came in June 2005, when Lewis agreed to buy credit card issuer MBNA Corp in a $34.6 billion deal that closed at the start of 2006. The speed of that transaction resembled that of Merrill's -- it took less than a week of talks.

The year 2007 brought the $3.3 billion purchase in July of the U.S. Trust Corp private banking unit from Charles Schwab Corp SCHW.O, and the $21 billion purchase of LaSalle Bank Corp three months later from Holland's ABN AMRO Holding NV.

Lewis' activities haven't fully translated into rewards for shareholders.

While the bank's market value is well above the $88 billion level it had when Lewis took over, it has fallen in recent months along with those of other banking companies, ending Friday at $154 billion. They fell further on Monday. (Additional reporting by Dan Wilchins; Editing by Simon Jessop and John Wallace)

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