Merrill Lynch & Co., the third- biggest U.S. securities firm,
began merger
> talks with Bank of America Corp. after its share price fell by
more than a
> third last week, people with knowledge of the negotiations said.
>
> The discussions took place as New York-based Merrill's smaller
rival Lehman
> Brothers Holdings Inc. moved closer to a bankruptcy filing after
Bank of
> America and Barclays Plc abandoned talks to buy the investment
bank.
> Merrill's board was considering a $29 a share offer, the Wall
Street Journal
> reported.
>
> Bank of America, based in Charlotte, North Carolina, has
maintained its AA
> credit rating as other U.S. financial institutions, including
Merrill, faced
> downgrades. Merrill's stock plunged last week after Oppenheimer &
Co.
> analyst Meredith Whitney predicted a $6.87 billion third-quarter
loss and
> investors speculated on Merrill's fate.
>
> ``A merger between Merrill and Bank of America is a good idea,''
said
> Richard Bove, an analyst at Ladenberg Thalmann & Co. in Lutz,
Florida. ``If
> Lehman fails, the next bank to be attacked would be Merrill. They
are
> attempting to forestall that attack by linking with Bank of
America.''
>
> Merrill Chief Executive Officer John Thain was among the Wall
Street chiefs
> who gathered the past three days for a series of meetings at the
Federal
> Reserve Bank of New York to discuss a resolution for Lehman. U.S.
Treasury
> Secretary Henry Paulson and New York Fed President Timothy
Geithner summoned
> the executives to the weekend meetings.
>
> Bank of America has rallied 82 percent since reaching a low on
July 15. On
> Sept. 12, the shares climbed 68 cents, or 2.1 percent, to $33.74
in New York
> Stock Exchange composite trading.
>
> Merrill shares fell 12 percent on Sept. 12 to $17.05, the first
close below
> $20 a share in a decade.
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