Embattled bank sells $4.4B stake to Singapore investment fund, $1.2B stake to U.S. firm and announces sale of its financial arm to GE Capital; analysts still weary.
Merrill Lynch announced three deals Monday which will allow the beleaguered bank to raise much needed cash as its new CEO John Thain tries to save the company from the huge losses it incurred after the mortgage market meltdown.
The company said it will raise as much as $6.2 billion by selling stakes to two investment firms.
Singapore-based financial firm Temasek Holdings will buy $4.4 billion of common stock, and has the option to purchase an additional $600 million by March 28, 2008, Merrill said.
In the same announcement Merrill Lynch said that Davis Selected Advisors, a U.S based investment firm, will purchase $1.2 billion in Merrill common equity.
The firms will not have a controlling stake in the company, Merrill said and the deals are expected to close in mid-January.
GE buying Merrill Lynch finance unit
Also on Monday, Merrill said that GE Capital, the financial unit of General Electric (GE, Fortune 500), would buy the bulk of operations from the company's financial arm: Merrill Lynch Capital, but terms of that deal were not disclosed.
Merrill Lynch & Co.'s (MER, Fortune 500) shares closed Christmas Eve's abbreviated trading session at $53.90, down $1.64 or nearly 3 percent.
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