Douglas ([info]beagley) wrote,
@ 2008-09-15 08:38:00
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Entry tags:news

BAC buys MER
Bank of America is going to buy Merrill Lynch. (BAC, MER)

Most of you probably could care less. It's just a bank merger, right?

Some comparisons, for perspective:

BAC buying MER is like General Motors buying Toyota. McDonalds buying Friendlies. Microsoft buying Apple. ABC buying CBS. The Yankees buying the Patriots.

It’s pretty darn nuts. Merrill Lynch has been around since 1914. They are the largest financial management company in the world. They manage 1.8 trillion dollars in assets. And they are being bought.

I happen to own some stock in both companies.

In a normal economic climate, I would expect BAC’s stock to drop today and MER’s stock to shoot up (to around BAC’s purchase price, give or take.) That’s usually what happens when one company buys another, and that would be fine with me. I own more MER than I do BAC.

However, this is not a normal economic climate. Lehman Brothers is declaring bankruptcy. Banks and brokers around the world are FREAKING OUT. Anything could happen, including the deal going south, or the deal improving, or both companies losing massive amounts of stock value, or unicorns replacing the bull as the Merrill Lynch insignia. ANYTHING could happen.

For the past 12 months, I’ve felt a little bit like the poker player who has made all the right decisions, but ended up losing based on information they couldn’t have known. (Namely, the turn and the river.) I’m still breaking even on my own decisions, but I was doing a lot better a year ago. But I'm doing fine. All my bills are paid. Some of my investments have done really well. And really, this is just a hobby for me, right?

But last night at 6pm when the New York Times sent a news alert about the merger (I was watching "Heroes" on DVD and tapping away on my pocket Mac), my brain reeled.

It’s like Verizon just bought AT&T.

Like Pepsico just bought GE.

Like...

(Article, Article, Article)

Updated: Okay, the market is responding to the turmoil in a textbook fashion. Everything in my portfolio is red today, except MER. BAC is currently down 11%, MER is currently up 31%. So, that's the typical reaction. The next few days/weeks could bring... anything. A few more pieces of bad news could send the whole ship south for a while, whereas good news would lead to stability, with MER climbing to $30 a share and BAC leveling off around the same price.


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[info]anadamous
2008-09-15 12:54 pm UTC (link)
Ugh. My only direct stake in this merger is that I have an account with BofA, but this worries the hell out of me. BofA is so mammoth and lumbering already, and Merrill Lynch seems to have nothing but problems, especially their recurring ethics issues. If BofA starts having massive problems, the whole country will have problems. Here's hoping they manage to straighten ML out... ugh.

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[info]beagley
2008-09-15 01:06 pm UTC (link)
MER was one of the TOP 5 IDIOTS in relation to the Mortgage Crisis, no question! But BAC has not been any kind of golden child. (There's a reason investors shoved BAC's stock below $20 earlier this year... and their "merger bloat" has been a regular source of criticism over the years.) BAC swooped in and bought Countrywide Financial, however, and that's looking like a brilliant move for now.

But okay, yeah. I agree. Especially if perception follows-- if Wall Street decides this is a good move, and it restores investor confidence, then here, here!

Most of Wall Street has a soft spot for MER. Or did until recently. They are THE BULL, after all! *sigh*

We'll see what happens... I'm just glad I'm not in any deeper than I am. :-)
-d

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[info]anadamous
2008-09-15 01:47 pm UTC (link)
Yeah, I should have been more clear. BofA is sort of lumbering and not great but fine, for now, but MER is just a crisis child. There's a chance that BofA can absorb MER and fix its problems, but...

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[info]desmondwolfe
2008-09-15 01:26 pm UTC (link)
But they said the economic problems are all in our head dude.

*I'm kidding*

This is pretty fucked up and a very bleak sign for our economy as a whole. I was taken aback by the news.

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[info]wildelven
2008-09-15 01:48 pm UTC (link)
OH MY GOD! SELL SELL SELL! NOW, HURRY, BEFORE EVERYTHING ENDS!

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[info]lucifers_girl
2008-09-15 05:43 pm UTC (link)
Fun fact: In a way Verizon did by AT&T, but it was the bits of AT&T that had turned into other various phone companies over the years.

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[info]beagley
2008-09-15 05:54 pm UTC (link)
So true!
And with AT&T buying up the Unicell rights that Verizon purchased in Vermont... it's like AT&T is buying parts of Verizon.

All the old pieces of the ancient "Ma Bell" seem to buy each other back and forth all the time. :-)

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[info]lucifers_girl
2008-09-15 09:45 pm UTC (link)
and you'll still find a lot of manhole covers that say Atlantic Bell on them. Maybe not in Vermont, but in other places.

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[info]blinovitch
2008-09-15 09:32 pm UTC (link)
"Once again the conservative sandwich-heavy portfolio pays off."

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