Merrill’s Moves Make It More Appealing Takeover Candidate
CreditSights welcomes Merrill Lynch’s (NYSE: MER) decision to take a markdown of $5.7 billion and raise up to $9.8 billion in capital.
In a new report Merrill Lynch: Clearing CDO Cobwebs, Can Investors be Constructive?, CreditSights says,“Net-net, we believe that Merrill’s actions today are a huge step in the right direction as it significantly reduced its ABS CDO and related monoline hedges while also increasing capital… following the current round of marks, we believe that Merrill may have put most of its CDO related marks behind it and raised capital to cover most of our other remaining hot stove marks.”
CreditSights also says Merrill’s moves makes the company “more appealing as a takeout candidate.”
Merrill has an attractive asset management business, a global capital market operation, a large stake in BlackRock, and a bank.
Many of these business units would make the company more attractive as a take over candidate, CreditSighs says. “We believe that in such case, potential acquirers could include Goldman Sachs, (NYSE: GS) HSBC (NYSE: HSBC), Bank of America (NYSE: BOA), and JPMorganChase (NYSE: JPM).”
CreditSights full analysis of Merrill’s moves is available for purchase.
Meanwhile, Moody’s has affirmed Merrill’s ratings at A2/stable after the moves.
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