Merrill to base asset sales on second-quarter loss
Merrill Lynch & Co (MER.N: Quote, Profile, Research, Stock Buzz) will determine how much of its stakes in BlackRock Inc (BLK.N: Quote, Profile, Research, Stock Buzz) and Bloomberg LP to sell based on the size of its second-quarter loss, a person briefed on the matter said on Wednesday.
If analysts’ current estimates of up to $6 billion of write-downs are accurate, Merrill could need to raise roughly $5 billion of capital, the person said.
The company could reach that level by selling the 20 percent stake in Bloomberg, which Merrill Chief Executive John Thain said last month could be worth $5 billion to $6 billion.
Or some portion of the 49.8 percent stake in BlackRock, the largest publicly traded U.S. asset management company, could be sold, the source said. The BlackRock stake is worth about $10 billion, based on current share prices.
A sale of a portion of both stakes is also conceivable, he added.
Determining exactly how much capital Merrill would try to raise is difficult, because companies often seek more funds than they need.
A Merrill Lynch spokeswoman declined to comment, citing a quiet period faxless cash advance. The company reports earnings next week.
Merrill Lynch has recorded more than $30 billion of write-downs since the third quarter of last year. Analysts say the third-largest U.S. broker-dealer suffered in the second quarter as bond insurers lost their top ratings and the structured credit market weakened.
Filed under: economics by TheDoor