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
A Merrill Lynch office is seen in York, Pa., Wednesday, Oct. 24, 2007. (AP Photo/Carolyn Kaster)   (Associated Press)
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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.