Bank of America Buys Merrill for $50 Billion

Still subject to shareholder and regulatory approvals, Bank of America (BAC 33.74) will acquire Merrill Lynch (MER 17.05).  The deal was announced early this morning.

Under the terms of the deal Bank of America will exchange 0.8595 shares of its common stock for each share of Merrill's common stock.  The all-stock transaction is valued at $50 billion.

The purchase further extends Bank of America's competitive presence.  More than a year ago Bank of America added LaSalle Bank to its retail operations, then acquired mortgage giant Countrywide Financial.  The acquisition of Merrill brings some of Wall Street's finest wealth managers and capital market strategists under Bank of America's roof.

The transaction is expected to close in the first quarter of 2009.

Bank of America expects the acquisition to result in $7 billion in pretax savings, fully realized by 2012.  It also expects the acquisition to be accretive to earnings by 2010.  According to CNBC, the deal will be 3% dilutive in 2009.

Shares of BAC are taking a hit in premarket action, while shares of MER have moved higher to more closely reflect the offer.