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Merrill Deal Yields $6.2B in Capital

Bank sells discounted stock to investors, sells division to GE

By Kevin Spak,  Newser Staff

Posted Dec 24, 2007 1:07 PM CST
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(Newser) – With another quarter of massive writedowns looming, Merrill Lynch today announced a deal to raise up to $6.2 billion by selling discounted stock to two investors. Up to $5 billion will come from Temasek Holdings, Singapore's state-owned investment company. The other $1.2 billion comes from money managers Davis Selected Advisors, the Wall Street Journal reports.

The newly created common stock is being sold for $48 a share, 14% lower than Friday’s closing price. Neither company will have a hand in Merrill’s management. Merrill also agreed to sell its middle-market commercial-finance business to GE Capital. The bank is expected to write down $8 billion in mortgage-related losses this quarter, after $8.4 billion in Q3.

A Merrill Lynch office is seen in York, Pa., Wednesday, Oct. 24, 2007. (AP Photo/Carolyn Kaster)
A Merrill Lynch office is seen in York, Pa., Wednesday, Oct. 24, 2007. (AP Photo/Carolyn Kaster)   (Associated Press)
A Merrill Lynch office is seen in New York, Wednesday, Oct. 24, 2007. Wall Street recovered from deep losses Wednesday on the possibility of a rate cut, but still traded lower, cautious about Merrill Lynch & Co.'s severe credit-related losses and a sharp September drop in existing home sales....
A Merrill Lynch office is seen in New York, Wednesday, Oct. 24, 2007. Wall Street recovered from deep losses Wednesday on the possibility of a rate cut, but still traded lower, cautious about Merrill...   (Associated Press)
A man walks out of the Temasek Tower in Singaporee in this Oct. 12. 2004 file photo. Investment bank Merrill Lynch & Co. on Monday, Dec. 24, 2007 said it sold a stake in itself to Temasek Holdings and Davis Selected Advisors for $6.2 billion as it looks to...
A man walks out of the Temasek Tower in Singaporee in this Oct. 12. 2004 file photo. Investment bank Merrill Lynch & Co. on Monday, Dec. 24, 2007 said it sold a stake in itself to Temasek Holdings and...   (Associated Press)
People arrive at the Merrill Lynch building on a rainy morning in New York in this Nov. 15, 2007 file photo. Merrill Lynch & Co. shares rose Friday, Dec. 21, 2007, on a report that the nation's biggest brokerage is seeking a $5 billion investment from Singapore state-owned investment agency...
People arrive at the Merrill Lynch building on a rainy morning in New York in this Nov. 15, 2007 file photo. Merrill Lynch & Co. shares rose Friday, Dec. 21, 2007, on a report that the nation's biggest...   (Associated Press)
People walk past the Merrill Lynch building on Thursday, Nov. 15, 2007 in New York. John Thain, CEO of NYSE Euronext, was chosen on Wednesday to lead Merrill Lynch effective Dec. 1. (AP Photo/Brian McDermott)
People walk past the Merrill Lynch building on Thursday, Nov. 15, 2007 in New York. John Thain, CEO of NYSE Euronext, was chosen on Wednesday to lead Merrill Lynch effective Dec. 1. (AP Photo/Brian McDermott)   (Associated Press)
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Merrill's cash hunt turns up more treasure
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Meet Davis Advisors
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Merrill deal helps send stocks up in short session
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Merrill Lynch seeking $5B cash from Singapore
Associated Press

 
Wall Street • subprime mortgages • Merrill Lynch • capital • Singapore • stock price

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