Merrill, BofA Shareholders Approve the Combination

During a special shareholders meeting at company headquarters in New York, Merrill shareholders approved the sale of the company to Bank of America, which brings to an end the independence of an investment bank founded in 1914.

Only a handful of shareholders spoke at Merrill's 45-minute meeting in New York's Financial District, with most saying the deal was disappointing, though necessary amid the market turmoil. Many laid the blame for putting Merrill in the position of needing to sell to avoid failure on former Chief Executive Stan O'Neal and the board of directors for not providing the oversight required to protect the bank.

Among those that spoke was Win Smith Jr., a former chairman of Merrill Lynch International and whose father was among Merrill's founders.

During his impassioned speech, Smith singled out the "failed leadership" of O'Neal and the board for Merrill's troubles, noting that they sacrificed the company's foundation and long-term growth for short-term gains amid the economic and housing booms earlier this decade.

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Aside from shareholders, European Union antitrust regulators on Friday also cleared the transaction, saying they saw no problems with the takeover.

The deal is expected to close by the end of the year, pending regulatory approvals. 

Bank of America Corp. Chief Executive Officer Kenneth Lewis’s takeover of Merrill Lynch & Co., the capstone of more than $100 billion in acquisitions he’s made since 2001, may prove the hardest to digest.

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“There are some hand grenades on the balance sheet that are going to blow up on Bank of America,” said James Ellman, a former Merrill Lynch money manger who is now president of San Francisco-based SeaCliff Capital LLC. “The cost savings are going to be nowhere near what they’ve already promised.”

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A merger was one of “few options that will allow the company to continue its operations,” proxy adviser RiskMetrics Group said in a Nov. 24 report.

 

“It’s really like the death of a friend,” said Winthrop Smith Jr., 59, a former head of Merrill’s international brokerage and the son of a former Merrill CEO, who attended Merrill’s shareholder vote in New York. “Its greatest legacy was bringing Wall Street to Main Street. They really democratized investing.”

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Job Cuts

 

While many of the top-performing brokers at Merrill will stay, others won’t be so lucky. Thain said in October that “thousands” of jobs would be cut. Richard Bove, an analyst at Ladenburg Thalmann Inc., said in October that Merrill may eliminate 10,000 jobs after the merger.

 

Lewis’s acquisitions include the purchase of FleetBoston in 2003 for $48 billion and credit-card issuer MBNA Corp. for $35 billion in 2006. Bank of America became a leader in home lending and credit cards after buying Countrywide Financial Corp. Lewis said in Charlotte that card-borrowing is likely to decline as consumers pull back on spending.

 

“The companies he’s been acquiring all make sense strategically,” Ellman said. “But the timing and price almost always seems to be off.”