Huge Bloomberg article on BofA’s Merrill acquisition. My view is that the vast majority of all mega-mergers are unmitigated disasters. The one true exception seem seems to be Commodity mergers (especially Energy/Oil), where you increase reserves but cut admin overhead.

As disastrous and expensive as the acquisition has been, the Bloomberg column argues it also has helped the bank compete with JPMorgan (JPM).

Merrill’s businesses contributed $1.8 billion to Bank of America’s first-half net profit of $7.5 billion, or 28 percent, even after the bank posted $27 billion in loan charge-offs and higher loan-loss reserves, according to company filings. Those businesses are likely to account for 25 percent to 30 percent of the bank’s profits over the next three years, said John McDonald, an analyst at Sanford C. Bernstein & Co. in New York.

The share of the bank’s revenue that came from investment banking and wealth management rose to 47 percent in the first half, after the Merrill acquisition, from 29 percent last year, according to the bank.

I don’t agree with much of the analysis, but it is nonetheless worth a read.

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Source:
Merrill Bringing Down Lewis Gives Bank 30% Profits
David Mildenberg
Bloomberg, October 5 2009

http://www.bloomberg.com/apps/news?pid=20601109&sid=aFVffgBHrpZk

Category: Bailouts, M&A

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “How Has Merrill Acquisition Impacted BofA?”

  1. contrabandista13 says:

    Well, how about Ali Baba and the 62 thieves…..?

  2. Mannwich says:

    More thievery of the middle class. When are people going to wake the eff up and realize that the so-called “capitalists” are not only eating their lunch, but taking off with theirs and their kids’ futures? How this is not criminal is beyond me. What kind of country and system incents people to pillage companies like this and make off with the money, while leaving a wake of utter destruction in its path?

    http://www.nytimes.com/2009/10/05/business/economy/05simmons.html?_r=1&hp

  3. philipat says:

    IMHO, most MegaMegers are done to obfuscate the Financial Statements so that Mangement can survive a little longer?

    GS are a bit more creative and keep changing the reporting year to eliminate the bad quarter?

  4. ZackAttack says:

    BankOfIndia knows squat-all about integrating acquisitions. They build narrow little Dilbert-esque caricatures of a workforce. If there’s a way to screw this up, they will find it.