Merrill Lynch sells stake in Bloomberg
Investment bank sells its 20 per cent stake in the media giant but keeps BlackRock
US giants Merrill Lynch, today expected to reveal its fourth consecutive quarterly loss, has reached a deal to sell its stake in financial terminal and data provider Bloomberg for an estimated £2.2bn ($4.5bn).
Merrill Lynch, which has a 20 per cent stake in Bloomberg, however, plans to retain its 49 per cent holding in money manager BlackRock.
The decision is believed to be part of an effort to raise some much needed capital, with analysts estimating that the investment bank will record write downs of up to $6bn in today’s second quarter results. This will be on top of the $30bn in write-downs it has already made since last year.
The BlackRock stake, which Merrill acquired in 2006, and is valued at around $10bn, is seen as one of Merrill’s core strengths.
There was speculation earlier this year it could sell the stake, in order to shore up its balance sheet, as its original agreement to own BlackRock expires next year. Merrill is expected to say today that it will hold onto the stake for another four years.
New York mayor Michael Bloomberg, who founded and still owns 68 per cent of the news group, has bought back the stake.
Merrill Chief Executive John Thain said on a call with investors last month the Bloomberg stake was worth roughly $5 to $6bn. Shares in Merrill, which have almost halved this year, rose 13 per cent to close at $28 yesterday.