Merrill Lynch to Sell Bloomberg Stake
The bank’s reported attempt to also shed its stake in asset manager BlackRock indicates a need to boost liquidity.
July 17, 2008
Merrill Lynch has reportedly agreed to sell back to its original owner a 20% stake in Bloomberg LP, the financial news service owned by New York City Mayor Michael Bloomberg.
Merrill Lynch, which will have its earnings call today at 5 p.m. EST, declined to comment and said it would address questions through that call.
The stake is valued at about $4.5 billion, according to earlier reports, including one from the Wall Street Journal, placing the Bloomberg News service’s value at more than $22 billion. Michael Bloomberg controls a stake of about 70% already.
Merrill Lynch also reportedly weighed selling its stake in BlackRock Inc., the listed asset manager. Merrill Lynch controls a 49.8 % stake in BlackRock, and reports that the investment bank would not sell off all or part of the stake came as a surprise to many.
It was anticipated that Merrill Lynch would seek to rid itself of the BlackRock stake, worth more than $10 billion, to offset losses projected to hover around the $2-per-share range it is expected to announce this afternoon. Write-downs are believed to exceed $6 billion.
Merrill has struggled to right itself in months following the development of the mortgage crisis. Last year, it ousted chief executive Stan O’Neal, and replaced him with former NYSE Euronext head John Thain.
BlackRock also revealed earnings Thursday, and beat most analysts' forecasts. The $274 million in profits it raked in represented a 23% increase over the same time last year.
Merrill Lynch and BlackRock shares traded well in the afternoon; Merrill’s stock was up about eight percent and BlackRock’s leapt about 13 percent.
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