Bank of America’s acquisition of Merrill Lynch won approval from shareholders of both firms on Friday, marking the final chapter for the Wall Street icon battered by the housing and credit crisis.
Approval by Merrill shareholders was followed hours later by a positive vote from Bank of America stock owners, setting the stage for closing of the deal, which has been cleared by US and European antitrust regulators.
The all-stock acquisition, initially valued at US$50 billion when it was announced on Sept. 15, now carries a value of US$19.7 billion, because of the slide in the price of Bank of America shares.
“When this transaction closes, Bank of America will have the premier financial services franchise anchored by the cornerstone relationship products and services of deposits, credit and debit cards, mortgages and wealth management,” Bank of America chairman and chief executive Kenneth Lewis said.
“With Merrill Lynch, we also will significantly add to our global footprint in several businesses, including investment banking and sales and trading, enabling us to deepen existing client relationships and create greater opportunity to establish new one,” he said.
The acquisition is expected to close by the end of the year, pending the receipt of regulatory approvals and meeting other conditions, a Merrill Lynch statement said.
“By approving this transaction, Merrill Lynch stockholders expressed confidence that the combination of our firm and Bank of America will create one of the most powerful financial institutions in the world, with unmatched capabilities and service,” said John Thain, chairman and chief executive of Merrill Lynch.
“This combination will create great value for our stockholders and clients around the world,” he said.
Hours ahead of the vote on Friday, the European Commission gave rapid approval to the landmark takeover.
Europe’s top competition watchdog said that it had “granted clearance” to the deal after reviewing it with a fast-track procedure reserved for takeovers not expected to cause competition problems.
Under the terms of the share transaction, Merrill Lynch would become a wholly owned subsidiary of Bank of America, the statement said.
The acquisition had been announced in September at the same time rival Lehman Brothers collapsed and fears were rising over the survival of Merrill, the brokerage giant with the iconic bull sculpture outside its Wall Street headquarters.
On finalizing the deal, Bank of America would bolster its position as the largest US banking and financial firm with assets of some US$2.5 trillion.
Shortly after the Bank of America-Merrill deal was announced in September, the two remaining big independent investment banks, Goldman Sachs Group Inc and Morgan Stanley, applied to become bank-holding companies by themselves — the credit crisis effectively doomed the stand-alone investment bank model.
Bank of America, based in Charlotte, North Carolina, would control deposits of some US$852 billion, or 11.9 percent of the US total, Federal Reserve statistics show.
The shares of both the entities, which have dropped extensively since the deal was struck, closed higher on Friday.
In line with a higher US stock market close, Bank of America ended 6.28 percent higher at US$15.24 while Merrill Lynch rose 9.49 percent to US$13.04.
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