NEW YORK (Reuters) – The boards of Bank of America (BAC.N) and Merrill Lynch & Co (MER.N) Inc are asking shareholders to approve the commercial bank’s buyout of the investment bank.
According to a filing with a U.S. regulator on Thursday, board members of both banks unanimously approved the deal and recommended shareholders also vote in favor.
Bank of America agreed earlier this month to exchange 0.8595 shares of its stock for each share of Merrill Lynch, valuing the deal at $50 billion when it was announced. Since then, shares in both companies have risen, although shares in Bank of America fell initially on the announcement.
Shares of Bank of America closed at $38.13 on Wednesday, while shares of Merrill Lynch closed at $26.70, or about 18.5 percent below the price implied by the deal.
Typically, when a stock trades significantly below the price offered in a takeover, investors have low confidence that the deal will go through at that price. But, as some analysts point out, financial share prices have been volatile while the U.S. Congress debates a plan to bail out financial markets. A ban on short selling is also affecting share prices.
Bank of America said it would buy Merrill Lynch after a weekend of negotiations between the two companies and after previously having considered acquiring Lehman Brothers Holdings Inc, which filed for bankruptcy shortly thereafter.
Shares of Merrill Lynch had plunged as the company struggled to raise capital and stave off further write-downs from its portfolios of mortgage securities.
(Reporting by Elinor Comlay; Editing by Steve Orlofsky)