Bank Of America To Acquire Merrill Lynch

The WSJ is reporting Bank of America (BAC) and Merrill Lynch (MER) are in advanced merger talks.

The terms under discussion aren’t clear yet at this point, but Merrill’s board is reportedly meeting to vote on a $29 per/share takeover offer which would value the firm, currently at $26 bln, above $40 billion. However, notes the Journal, Merrill’s talks with Bank of America could still falter at the last moment.

The talks come amid a negative record-breaking year for Merrill. The firm has written down more than $40 billion over the last several quarters, due in large part to exposure from sub-prime mortgages and collateralized debt obligations.

As result of a weak balance sheet, that has negatively impacted firm’s efficiency at generating profits, Merrill’s shares have come under intense selling pressure since October ‘07, nosediving from $79 to current $17 level. Last week MER dropped 36%, cutting the firm’s market cap by $15 billion.

A merger deal comes as bankers and federal regulators met over the weekend in New York to find a way to rescue Lehman Brothers Holdings Inc. (LEH), which based on the latest developments seems to be heading toward bankruptcy.

Update: WSJ is now reporting that Merrill Lynch agreed late Sunday to sell itself to Bank of America Corp. (BAC) for approx. $44 billion, or roughly $29 a share.

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