Merrill Lynch ended its 94 years of independence when shareholders voted to approve the sale of the nation’s largest brokerage house — with its “thundering herd” of brokers, “Bullish on America” slogan, and all — to Bank of America Corp.
During a special shareholders meeting at company headquarters in New York, Merrill shareholders approved the sale of the company to the Charlotte, N.C.-based bank. Bank of America shareholders then gave a thumbs-up to the acquisition.
European Union antitrust regulators on Friday also cleared the transaction, saying they saw no problems with the takeover. The deal, valued at $50 billion, will create the largest financial services company in the U.S.
The acquisition of Merrill marks a sad turn of fate for a firm that traces its roots back to 1914, when a 28-year-old businessman named Charles Merrill started a brokerage house and five months later brought in his friend, Edmund Lynch. The two had met seven years earlier at a YMCA boardinghouse on 23rd Street, when both were fresh arrivals to New York and looking to save money on rent.
Ninety four years later, most of Merrill’s senior staff, including Chief Executive John Thain, have already agreed to join B of A.
But the company’s brand name will live on. Its nearly 17,000 retail brokers—90% of whom have agreed to take their business to B of A—will continue to do business under the Merrill banner.
It’s also possible that the Merrill name will live on in other lines of business, such as investment banking. While the reputation of Merrill’s investment banking unit has been severely dinged by the monstrous mortgage-related losses it generated—losses that ultimately forced the firm into BofA’s arms—dealmakers might adopt the name. Some executives note that overseas, Merrill’s name is far better known and respected than that of its new parent.
B of A management has said it plans to extract $7 billion in annual cost-savings from the deal by 2012, which would equal 9% of Merrill’s operating expenses last year. That suggests 5,500 of Merrill’s 61,000 employees could lose their jobs, particularly in back-office and other support positions where there is heavy overlap with B of A. The figure could ultimately be much higher, with thousands of investment bankers vulnerable considering their business has been comatose for months with no recovery in sight.
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