Posts filed under “M&A”
Fascinating front page WSJ article on the tactics used by Fed Chair Ben Bernanke, Treasury Secy Hank Paulson to “persuade” Bank of America CEO Ken Lewis who the new sheriff in town was: “Kenneth Lewis is getting a hard lesson in the new balance of power between Washington and Wall Street. The Bank of America…Read More
Caterpillar: 20,000 Pfizer: 19,000 (10% reduction), plus additional layoffs due to merger with Wyeth: Sprint Nextel: 8,000 Home Depot: 7,000 Philips: 6,000 jobs ~~~ Bloomberg reports 74,000 job cuts today alone as “sales withered and construction slowed amid a global economic recession.” Before today, at least 15 companies announced they planned to eliminate 93,000 positions…Read More
Wednesday night, I suggested it was Time to Fire Ken Lewis of Bank of America. Since then, several other people have come out to echo those sentiments: David Reilly, Bloomberg notes that the bad bet on Merrill follows a bad bet on China Construction Bank and an even worse bet on Countrywide: Kenneth Lewis gambled…Read More
Taxpayers should be furious at how they and their money are being treated. Bank of America did not buy Merrill Lynch for the good of the country: It bought it because Ken Lewis thought, wrongly, that he was getting a deal. Ken Lewis should be held accountable for this. Hank Paulson, meanwhile, should immediately disclose exactly what this secret deal was, when he made it, and why:
That some BAO shareholders are calling for Lewis to be fired is not surprising, considering:
* On Dec. 5, Bank of America shareholders approved the Merrill transaction; less than two weeks later, BOA executives were meeting with government officials expressing concern about the size of Merrill-related losses. BOA’s official explanation – “beginning in the second week of December, and progressively over the remainder of the month, market conditions deteriorated substantially…” – rings hollow, at best.
* From the end of 2007 until early September 2008, Merrill had taken over $50 billion in subprime-related losses, according to Bloomberg. Did Lewis and BOA’s management think that was the end of Merrill’s losses?
* Bank of America has now received $45 billion in direct government capital – diluting common shareholders and matching the amount received by industry laggard Citigroup – as well as $118 billion in guarantees for its bad debts.
* Everyone today is focused on the Merrill Lynch deal, but Lewis also acquired Countrywide Financial, the biggest and most aggressive lender of the subprime era. Raise your hand if you think there aren’t huge losses coming from that portfolio.
Alternative title: $%#tty-Group
Oh terrific: We are going to have two medium size piles, instead of one giant compost heap.
Is this going to be a good bank/bad bank split, or is it more accurate to say its a bad bank/worse bank ?
Serious question: Can you name any mega-mergers that have actually worked as advertised? Outside of Oil/commodity firms (Exxon Mobil, Conaco Phillips, BP Amoco are just piles of similar resources), has ANY massive M&A conglomerate actually worked out?
Monster firms all seem to have similar problems: Clash of egos, disparate business lines, frictional corporate cultures.
The one successful example I can think of is Oracle — but they have mostly bought firms started by former employees.
Have any jumbo mergers actually worked out for shareholders?
The United States of Wall Street just added another major holding to its portfolio of financial garbage: Bank of America. Like Citi, BA has now received more MORE IN BAILOUT MONEY than its actually worth. (BAC = $53B; C = $21B) How this can ever be a profitable investment, as some mathematically challenged Congress-critters have…Read More
WSJ’s Evan Newmark and Dennis Berman discuss the latest news from the banking sector, including plans for more aid to Bank of America and concerns about the withholding of information from shareholders. Such lack of disclosure is hurting trust in U.S. financial institutions, Evan argues.