Bank of America Corp’s $50 billion acquisition of Merrill Lynch & Co Inc marks the end of a storied name in American finance, but also creates the nation’s biggest bank by far.
The purchase would end the 94-year independence of Merrill, Wall Street’s third-largest bank, and pair it with a banking behemoth that has announced more than $150 billion of acquisitions in the last five years. Bank of America would pass Citigroup Inc, the largest bank by assets, in size.
Merrill shares jumped 19 percent, while Bank of America slid 14 percent at mid-day Monday.
Monday’s merger deal came together in less than two days — after Merrill Chief Executive John Thain called Kenneth Lewis, his counterpart at Bank of America, to propose a combination. The deal came as Thain, other top industry executives and officials from the U.S. Federal Reserve had huddled in emergency meetings in downtown Manhattan over the weekend to mull the fate of Lehman Brothers Holdings Inc.
“We thought this was the strategic opportunity of a lifetime,” Lewis, 61, said at a news conference with Thain in Bank of America’s new offices in New York http://payday-nofax.com online payday advance. The bank will remain based in Charlotte, North Carolina, Lewis said.
Bank of America agreed to pay 70 percent more than Merrill’s closing price Friday. The shares had fallen precipitously in the last week as worries grew that it could become Wall Street’s next casualty.
Lehman, the fourth-largest Wall Street investment bank, filed for bankruptcy protection on Monday.
Adding Merrill would more than double the size of Bank of America’s investment banking unit, and give it the largest retail brokerage and a dominant position in wealth management. It also would get Merrill’s 45 percent stake in the asset manager BlackRock Inc.
The ruptured U.S. financial system faces an unprecedented shakeup with Lehman Brothers filing for bankruptcy, Bank of America buying Merrill Lynch and the Federal Reserve saying for the first time it will accept stocks in exchange for cash loans.
On a black Sunday for Wall Street, 10 of the world’s biggest banks also agreed to establish a $70 billion emergency fund, with any one of them able to tap up to a third of that.
Separately, troubled insurer American International Group asked the Fed for a lifeline, according to news reports.
The events, which followed three days of talks between bank CEOs and regulators at the Fed’s fortress-like Manhattan building, indicate that Wall Street and Washington were accepting that massive triage is needed in the face of the credit crisis and U.S no teletrack payday loans paydayloans. housing bust.
“The U.S. financial system is finding the tectonic plates underneath its foundation are shifting like they have never shifted before,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
“It’s a new financial world on the verge of a complete reorganization.”
Lehman will become Wall Street’s highest profile bankruptcy since junk bond specialist Drexel Burnham Lambert succumbed in 1990.
S&P500 share futures were down 3.4 percent after Lehman announced it filed for Chapter 11 bankruptcy protection, indicating the stock market will open sharply lower on Monday, and the dollar tumbled.
Regulators and bankers failed on Saturday to reach a deal to end the crisis at investment bank Lehman Brothers, and emergency talks were extended to a third day as authorities seek to calm jittery financial markets.
So far this year, the government has sponsored rescues of Lehman rival Bear Stearns and mortgage lenders Freddie Mac and Fannie Mae.
But this time, U.S. Treasury Secretary Henry Paulson is adamant that taxpayer funds not be used, a source familiar with his thinking said on Friday.
The talks on Saturday ended without an announcement, but the final outcome could include hiving off Lehman’s bad assets into a “bad bank”, in which rival banks would acquire stakes, or even allowing it to file for bankruptcy, people briefed on the matter told Reuters earlier.
The crisis presents a delicate balancing act for Paulson and the Federal Reserve, who have urged Wall Street chiefs to come up with their own solution.
The authorities don’t want to be accused of encouraging excessive risk-taking by bailing out another yet another investment bank.
But they also cannot afford to let a blow-up of Lehman paralyze the financial system and deepen the credit crisis.
Investors said that if nothing is done by Monday, global financial markets could plunge, because of fear that the U.S same day payday loans paydayloans.com. government will have to prop up more financial institutions.
U.S. stocks jumped Monday morning, with the Dow up more than 300 points, as investors hailed the government’s announced takeover of mortgage giants Fannie Mae and Freddie Mac.
The Dow Jones industrial average (INDU), the broader Standard & Poor’s 500 (SPX) index and the Nasdaq composite (COMP) all rallied in the early going.
Fannie-Freddie: On Sunday, Treasury Secretary Henry Paulson and James Lockhart, director of the new Federal Finance Housing Agency, said the agency was placing Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) under a "conservatorship" and that the Treasury would extend $200 billion worth of support.
While the markets perceive this as good news overall, it could wipe out individual stock owners. Fannie-Freddie’s $36 billion worth of shares are owned by a plethora of financial institutions including JPMorgan Chase (JPM, Fortune 500) and Sovereign Bancorp (SOV, Fortune 500), according to Keefe, Bruyette & Woods.
Shares of the two companies fell more than 80% in early trading.
World markets: Asian markets finished sharply higher in reaction to the Fannie-Freddie bailout, with Japan’s Nikkei index gaining 3.4%. European stocks rallied in midday trading, with Britain’s FTSE rising 3.8% and German’s DAX gained 3.4% instant payday loan cash advance.
The dollar rose versus the euro and the British pound, but slipped against the yen.
Boeing strike The strike by 27,000 Boeing (BA, Fortune 500) workers extended into its third day. For each day that the union members refuse to assemble airplanes, Being loses $100 million.
M&A: Tobacco giant Altria Group (MO, Fortune 500) said it would buy UST (UST), maker of dip products including Skoal and Copenhagen, for nearly $10 billion.
Economy: At 3 p.m. ET, the Federal Reserve will announce the level of consumer debt for July. A consensus of analysts projects $8.5 billion, down from the prior month’s total of $14.3 billion.
Oil: Crude futures rose $1.68 a barrel in electronic trading to $107.91, fueled by anxiety over Hurricane Ike. The hurricane is expected to enter the Gulf of Mexico - home to 4,000 drilling platforms, 32 refineries and 33,000 miles of pipeline - when it’s finished tearing through Cuba.
Also, Iran’s oil minister Gholam Hossein Nozari said OPEC is considering cutting oil production to reduce supply in a bid to bring up prices, which have declined in recent weeks.
A measure of U.S. employment expectations fell to its lowest level since 2003, amid signs the U.S. job market slowdown is spreading to economies around the globe, according to a quarterly survey by Manpower Inc (MAN.N: Quote, Profile, Research, Stock Buzz) released on Tuesday.
The staffing services company said its seasonally adjusted net employment outlook fell for the fourth consecutive quarter, reaching a level of 9, down from 12 last quarter and 18 a year ago. The index measures the difference between employers who plan to add jobs and those who expect to cut them.
“We are clearly in a softening period in the labor market that may be at recessionary levels,” Manpower Chief Executive Jeff Joerres said.
If the index were to fall to a level of 4 or 5, he added, it would be more similar to past recessions.
Of the 10 U.S. sectors tracked by Manpower, only mining has an improved outlook for job seekers compared with the previous quarter paydayloans no fax payday loans. Prospects have weakened in six other sectors and are stable in three.
POOR RETAIL OUTLOOK
Employers in the U.S. wholesale and retail trade sector report their weakest hiring intentions since the third quarter of 1991, and the lowest fourth-quarter reading ever.
U.S. retailers have faced hard times before. But now the many negative factors — weak housing markets and construction activity, high energy costs and a slowing world economy — are coming together in the fourth quarter, suggesting a bleak outlook for the key U.S. holiday shopping season. Employers in the western United States are especially cautious.
Nokia Oyj (NOK1V.HE: Quote, Profile, Research, Stock Buzz), the world’s biggest cellphone maker, said it expects to lose market share in the third quarter as it fights to maintain profit margins, sending its shares as much as 14 percent lower.
Nokia warned its third-quarter market share would fall from the 40 percent notched up in the second three months of the year, compared with a steady market share it forecast earlier.
It said it expected the mobile device market in 2008 to be hit by weak consumer confidence in many markets and also cited tough competition in developing markets, its stronghold.
“Most alarming for me is that they’re saying they’re seeing more pressure in the low end of the market,” said analyst Neil Mawston at Strategy Analytics.
“That really defines their profits, volumes; they get a lot of their economies of scale out of it fast cash loans guaranteed payday loans. They really dominate that area,” he said.
Analysts said Nokia and some other top vendors were likely to be losing ground to small vendors who are cutting prices in the hope of winning increased orders in the competitive business.
Nokia said it would ramp up one mid-range model more slowly than planned, with analysts saying the comments were likely related to the 5320 music phone.
Due to the confluence of negative factors, Nokia said margins at its core Devices & Services unit would fall below 20 percent in the third quarter.
Northwest Airline Corp.’s traffic increased 1.9 percent in August, amidst rising fuel costs and airfare hikes.
The Eagan, Minn.-based carrier flew 7.3 billion revenue-passenger miles last month. That’s up from 7.1 billion in the same month last year. Each revenue-passenger mile represents one paying passenger flown for one mile.
International traffic rose 7 percent, while domestic traffic fell 8.4 percent.
Northwest’s (NYSE: NWA) available-seat miles grew 3.1 percent to 8.4 billion pay day loans instant cash advance. Each available-seat mile stands for a mile flown by a seat, occupied or not. The airline’s load factor, a measure of how full were for the month, fell to 86.6 percent from 87.6 a year ago.
Northwest is the third-largest carrier at Milwaukee's General Mitchell International Airport.
The European Central Bank is widely expected to leave interest rates at 4.25 percent later on Thursday, with a new set of staff economic projections and a likely rejig of collateral rules set to provide this month’s fireworks.
The monthly meeting of the ECB’s 21 policymakers kicked off at 3 a.m. EDT with more than usual on the agenda. Updated staff projections will arm them with an up-to-date prognosis of the economic outlook while the delicate issue of collateral rule changes could raise the temperature of the meeting.
The projections are not expected to make happy reading. Analysts expect 2008 and 2009 growth forecasts be revised down and inflation forecasts to be pushed up for 2008 at least
The last set in June put growth at 1.5-2.1 percent this year and 1.0-2.0 percent in 2009. Inflation was seen between 3.2-3.6 percent this year and 1.8-3.0 percent next year.
“The ECB will have to acknowledge that the growth outlook has weakened and we expect the staff forecast to be revised down for 2009 probably to a mid point of 1.2 percent,” said Deutsche Bank economist Thomas Mayer.
The Organisation for Economic Cooperation and Development (OECD) chopped its 2008 growth forecast for the 15 nation euro zone earlier this week to 1.3 percent from 1.7 percent and it was confirmed the region suffered its first ever quarterly contraction in April, May and June.
The euro sank to a new eight-month low against the dollar on Wednesday after July retail sales and August services sentiment signaled more weakness ahead.
In an newspaper interview published on Thursday, Dutch governing council member Nout Wellink warned the current credit market turmoil could last for years easy payday loans.
Coca-Cola Co, the world’s largest soft drinks maker, offered to buy juice maker China Huiyuan for a hefty premium, marking the biggest takeover in China by a foreign company.
The all-cash deal of $2.5 billion, which still requires regulatory approval, values Huiyuan at nearly three times its closing price on Friday.
Coca-Cola, which has offset flat sales at home by expanding globally, dominates a growing Chinese diluted-juice market and now hopes to make inroads into an untapped pure-juice sector.
Major acquisitions have slowed to a trickle in past years in a fragmented Chinese consumer industry as companies grapple with fierce competition and a slide in margins. Local brand names are also known to resist foreign control, analysts said.
Huiyuan, more than one-fifth-owned by France’s Danone, controls 10.3 percent of a Chinese fruit-vegetable juice market that grew 15 percent last year to $2 billion freecreditreport. It’s followed closely by Coca-Cola with a 9.7 percent market share.
China is already Coca-Cola’s fourth-largest market and a crucial battleground with rival PepsiCo — it has twice Pepsi’s soft-drinks market share with 15.5 percent.
Coca-Cola is paying a high premium for a company it hopes will strengthen its grip on the domestic juice market, and it may have plans to sell Huiyuan’s drinks abroad, analysts say.
“The move is a big surprise to the market and the offer is super-generous,” said Lawrence Chor, analyst at Tai Fook Securities. “It’s very possible Coca-Cola will leverage the Huiyuan brand, acquire other Chinese juice makers, then boost their output for export.”
Insurer Allianz SE agreed Sunday to sell Dresdner Bank AG to Commerzbank AG in a 9.8 billion-euro ($14.38 billion) deal, a sale that may well herald a wave of German bank consolidation and keep foreign rivals from laying claim to a lucrative market.
The deal came after weeks of market speculation and will create Germany’s biggest bank in terms of customers, propelling it ahead of Deutsche Bank. However, the combined bank’s assets will still fall shy of Frankfurt-based Deutsche Bank’s approximately 2 trillion euros ($2.93 trillion) in assets.
But the decision comes with a heavy toll in terms of job cuts: 9,000 workers out of the combined banks’ ranks of 67,000 workers will be eliminated, including back office, production and investment bankers. Of those cuts, 6,500 will take place in Germany with the other 2,500 abroad.
Separately, Commerzbank employs more than 41,600 workers while Dresdner employs more than 25,000 workers.
But executives at Allianz and Commerzbank say the deal makes sense financially and in terms of expanding market share in Germany and abroad.
"We are taking advantage of a unique opportunity to make Commerzbank the leading bank for private and corporate customers in Germany," Commerzbank Chief Executive Martin Blessing said. "We are building a market leader with European significance, and are creating added value for our shareholders. At the same time, the deal will secure many attractive jobs for the long-term, even though unfortunately we cannot keep all current positions."
The new bank will have 11 million private customers in Germany and a thick network of 1,200 branches peppered across Europe’s biggest economy.
"We will be even more easily accessible, we will offer an even more attractive range of products, and we want to continue to enhance our joint market share," Blessing said.
It will also have more than 100,000 corporate and institutional clients and expand its wealth-management operations for well-heeled private clients, too.
By selling to Commerzbank, Allianz will also get a new avenue for selling its insurance products through the newly combined bank’s branches, much like it has done through its Dresdner Bank branches freecreditreport. It will also get Cominvest, which is worth 700 million euros ($1 billion).
"This transaction is a milestone for banking consolidation in Germany and strengthens the German economy," Allianz CEO Michael Diekmann said. "With an approximate stake of up to 30 percent, Allianz will be Commerzbank’s largest shareholder and will gain access to its powerful distribution network."
The sale was no surprise given that earlier this year Diekmann said that Dresdner’s write-downs at its investment back had eroded profit there four quarters in a row.
Under the terms of the deal, Commerzbank agreed to cover the first 275 million euros ($403.7 million) in potential losses on some asset-backed securities while Allianz said it would cover the next 975 million euros ($1.4 billion) in losses related to Dresdner assets.
The deal to sell Dresdner Bank is a two-step process, Allianz said.
First, Frankfurt-based Commerzbank will acquire 60.2 percent of its shares from Allianz and, in exchange Allianz will receive 163.5 million shares, or about 18.4 percent of Commerzbank, worth some 3.4 billion euros ($5 billion).
Commerzbank will also pay Allianz another 2.5 billion euros in cash ($3.7 billion).
In the second step, Dresdner Bank will merge with Commerzbank, which will acquire its remaining 39.8 percent shares "again, against a contribution in kind." Allianz will receive 3.2 billion euros ($4.7 billion) in shares from Commerzbank, give it nearly 30 percent of Commerzbank’s shares.
"This will make Allianz the largest shareholder by far and a strong partner of the new bank," the Munich-based insurer said.
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