Bank of America CEO gets his prey, with Merrill
NEW YORK (Reuters) - Kenneth Lewis's seven-year tenure at the helm of Bank of America Corp has been marked by big, audacious, complicated acquisitions.
Buying Merrill Lynch & Co may top them all.
Lewis's plan to buy Merrill in a $50 billion all-stock transaction cements his reputation as one of the most aggressive acquirers in corporate history, with well over $150 billion of acquisitions.
In that sense, the 61-year-old Lewis proved a worthy successor to Hugh McColl, who was known as 'Huge' for his deal making. That 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 by far the biggest U.S. retail bank, with more than 6,100 branches and about one in every 10 U.S. dollars on deposit. It was also the largest credit card issuer and home equity loan provider.
The bank said adding Merrill would make it 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.
Wealth management assets would also soar, and Bank of America would assume Merrill's nearly one-half stake in BlackRock Inc, 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 Financial Corp, the largest U.S. mortgage provider. 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 roughly $1.9 trillion, but the largest by market value, at about $154 billion. With Citigroup Inc 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 -- although in buying Merrill, he spurned the stricken Lehman Brothers Holdings Inc. Continued...
