Merrill Lynch to sell 20 per cent Bloomberg stake for $4.5 billion

Mumbai: Wall Street investment bank Merrill Lynch & Co Inc has agreed to sell its 20 per cent stake in Bloomberg LP, the parent of Bloomberg News, back to the news and financial data company for about $4.5 billion, a source close to the developments said.

Merrill, however, dropped efforts to sell its 49.8 per cent stake in BlackRock Inc, the largest publicly traded US fund manager, reports citing sources close to the development said.

The BlackRock stake is valued at around $2 billion.
 
Merrill, the third-biggest US securities firm, is expected to write down as much as $6 billion in the second quarter, in addition to over $30 billion in write-downs since the third quarter of 2007.

Merrill had approached Bloomberg founder Michael Bloomberg, who is now New York's mayor and still owns about 70 per cent of the company, for the sale of its 20 per cent stake. It is, however, not know what role he has played in the stock sale.

Merrill chief executive John Thain had told investors last month that Merrill's 20 per cent stake in Bloomberg was worth roughly $5 billion to $6 billion. That would value Bloomberg at roughly $20 billion.

Selling the Bloomberg or BlackRock stakes could help Thain raise capital to make up for write-downs related in part to subprime mortgages. But, that would also  add to the wealth of Michael Bloomberg, who now ranks 65th on Forbes' billionaires list with a net worth of $11.5 billion.

The new valuation would increase his wealth to more than $15.0 billion, taking him up to roughly 42nd place, trailing Microsoft co-founder Paul Allen and maverick investor Kirk Kerkorian, but ahead of Microsoft's current chief executive, Steve Ballmer, and Fidelity's Abigail Johnson.