We went into the weekend thinking Bank of America
A huge deal
The deal ends the 94-year independence of one of Wall Street's legendary firms and leapfrogs B of A ahead of Citibank
The acquisition also underscores the gravity of the present crisis and reshapes Wall Street, leaving only two major independent investment banks: Goldman Sachs
Thain does his job
Despite the fact that John Thain will have had a short tenure as CEO of Merrill (there's a pretty good chance he will leave the job post-acquisition), this tie-up does him tremendous credit. Without being impeded by ego, he understood quickly that in this environment, any sign of blood can set off a "run on the bank" with ferocious speed. After Lehman, the market was focused on Merrill as the next domino -- Merrill shares lost more than a third of their value last week.
Thain was brought in to turn Merrill around, but any turnaround is contingent on survival. In an extreme market that is pitiless with wounded banks, a takeover by B of A is probably the best fate Merrill shareholders could hope for.
The takeover price may be less than 40% of Merrill's 52-week high, but it's a 70% premium to Friday's closing price. Still not convinced? Ask Lehman shareholders what they think; Lehman shares opened at $0.26 today.
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Alex Dumortier, CFA has no beneficial interest in any of the companies mentioned in this article. JPMorgan Chase and Bank of America are Motley Fool Income Investor recommendations. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.