Merrill Lynch CEO says not selling Bloomberg stake

NEW YORK (Reuters) - Merrill Lynch & Co MER.N Chief Executive John Thain said on Thursday he has no plans for the sale of the company's 20 percent stake in news and financial data provider Bloomberg LP to boost capital.

Some investors believe the world's biggest brokerage should sell the stake, worth an estimated $5 billion, because it is not one of Merrill's main businesses.

Selling now, when results are otherwise relatively weak, would ensure the tax bill from the deal would not be too high, said James Ellman, president of hedge fund Seacliff Capital in San Francisco, which owns shares.

Merrill posted a $2.1 billion first-quarter loss to shareholders last week -- its third consecutive loss, hurt by more than $6.5 billion of write-downs of subprime mortgages and other assets.

The company sold $2.55 billion of preferred shares earlier this week but does not plan to issue more common equity or securities convertible into common equity, Thain said.

Merrill's holding onto its Bloomberg stake amounts to a bet that the credit markets will stabilize or even improve, allowing Merrill to stop recording the big write-downs that could force it to raise capital, Ellman said.

Or it could represent a bet that if Merrill Lynch did need to raise capital, it would be able to sell shares at above their book value, Ellman added.

"Merrill Lynch like many others is playing chicken with the markets," Ellman said.

When asked if Merrill Lynch had any plans to sell its Bloomberg holdings, Thain said: "No." He was speaking to reporters after the company's annual meeting. His comments echoed statements he made in January, when he said Merrill was not interested in selling its stake. In October, then-chief executive Stan O'Neal said Merrill was looking at selling "certain non-core assets."

Bloomberg LP competes with Reuters in providing news and financial data. A spokeswoman for Bloomberg declined to comment

(Reporting by Dan Wilchins; editing by Mark Porter and Gerald E. McCormick)