Implode-o-Meter News - Bank of America Reaches Deal for Merrill

In a rushed bid to ride out the storm sweeping American finance, 94-year-old Merrill Lynch & Co. agreed late Sunday to sell itself to Bank of America Corp. for roughly $50 billion, including restricted stock and vested stock options.

The deal, which was being worked out in 48 hours of frenetic negotiating, could instantly reshape the U.S. banking landscape, making the nation's prime behemoth even bigger. The boards of the two companies approved the deal Sunday evening, according to people familiar with the matter.

I find it amusing the writers in this article wax philisophic about BofA's challenges ahead in integrating Merrill... as if they have already surmounted the challenges in integrating Countrywide. Most notably, their inestimable liabilities.

Perhaps this is the most telling of all:

During the flurry of historic dealmaking this weekend, Merrill approached Morgan Stanley about a possible deal, which would have united two of Wall Street's oldest brands, according to a person familiar with the talks. But the talks didn't go anywhere because there wasn't enough time for Morgan Stanley to review the idea and Merrill wanted to do the deal quickly, this person said.

A cynical way to read that would be that only Bank of America was foolish enough to take on Merrill's liabilities in a shotgun wedding.

Edward Harrison thinks this deal is smart for BofA. Mish disagrees on another basis:

Thus... Bank of America (BAC) agreed to pay $44 billion for a company that would have been worth $18 billion on Monday's open, assuming a $5 markdown on Monday to $12. Why?

Relevant:

Bank of America Reaches Deal for Merrill