PPRuNe Forums - View Single Post - Wall Street speculates on ILFC change of ownership
Old 16th Sep 2008, 04:28
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philipat
 
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Mother Merril

VAFFPAX:

Merill Lynch is already toast. They already caved in to an offer from Bank of America (a nice $50 billion price tag, covered by a shares-only transaction).

I do agree that Berkshire is a very likely purchaser. Right up Buffett's street to buy premium businesses at firesale prices. Private equity probably would be constrained by ongoing capital requirements, wherea Buffett could operate just as AIG did.

The final value of the deal, incidentally, will be substantially less than the published amount. The new shares will dilute existing shareholders and the share price will fall to reflect the dilution. As the share price falls so the value of the deal, still the same number of BofA shares for each MER share, becomes lower.

It's a very smart deal for both parties IMHO.
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