Singapore state investment company Temasek Holdings Pte. Ltd. stands to make about $5 per Merrill Lynch & Co (MER) share in paper profit after selling its stake in the U.S. investment bank to Bank of America (BAC) for $29 per share, two people familiar with the situation said.
More in comments...
1 comment:
Temasek To Make About $5 Per Shr In Merrill Sale-Sources
By Costas Paris and John Jannarone
Of DOW JONES NEWSWIRES
15 September 2008
SINGAPORE (Dow Jones)--Singapore state investment company Temasek Holdings Pte. Ltd. stands to make about $5 per Merrill Lynch & Co (MER) share in paper profit after selling its stake in the U.S. investment bank to Bank of America (BAC) for $29 per share, two people familiar with the situation said.
“They (Temasek) bought for an average $24 per Merrill share so they are above water. Given the circumstances it’s not a bad deal,” one of those people told Dow Jones Newswires. But “it will all depend on how Bank of America shares do when they open Monday morning,” the person added.
Temasek is the largest single investor in Merrill with a 14% stake or about 214 million shares indicating it will profit by about $1 billion if it sells the shares for $29 each.
Earlier Monday Bank of America agreed to buy Merrill Lynch for $29 per share according to the Wall Street Journal. Bank of America is expected to make an all-stock offer so the value of Temasek’s investment could change, depending on how Bank of America stocks perform after the deal.
The second person said Temasek has yet to decide whether it will keep or sell the Bank of America shares it receives.
“The investment team is meeting now. Their decision on how to handle the Bank of America shares will depend on how they view the long-term prospects of the bank. Temasek always looks at the long term.”
Temasek bought about 9% of Merrill last December for $5 billion, or $48 a share, but its effective purchase price was reduced in July when the bank gave it another $2.5 billion in shares. The transfer was a result of a price-protection measure triggered when the bank raised more funds from other investors at a lower price per share.
Merrill shares were trading at about $24 when the second fundraising was announced. At the time, Temasek also invested another $900 million in new cash, raising its stake in Merrill to 14%.
Merrill’s stock came under pressure last week as concerns about Lehman Brothers Holdings Inc. (LEH) fanned worries about its own health. Merrill’s shares dropped 36% in the week, cutting $15 billion off of its market value, which stood at $26 billion on Friday.
Post a Comment