Has anyone seen the language in the Bank of America (BAC)-Merrill (MER) merger agreement? We haven’t. But given that Merrill’s stock is now almost back to where it was before the deal–and taking BAC down with it–we wonder what kinds of “outs” Bank of America has.
Bank of America wasn’t exactly a financial Rock of Gibraltar before the Merrill deal, and Merrill’s toxic assets will now make its own capital situation even more tenuous. And CEO Ken Lewis still has yet to adequately explain why he paid $29 for Merrill when he likely could have had it for $15 by waiting a day.
The arbitrage spread between the stocks is huge. The market, therefore, appears to think there is some risk to the deal, which seems a reasonable conclusion. Needless to say, if the deal falls apart, Merrill is likely toast.
Bank of America Shareholders Wake Up and realise They Paid Too Much For Merrill
Ken Lewis’s Ringing Endorsement of Merrill: It Might Have Survived
Bank of America Crushed On Bizarrely High Merrill Bid
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