Unilateral merger bid may cost Merrill Lynch chief his job

26 October 2007

According to sources close to the beleaguered Wall Street firm, O''Neal broached the possibility of a merger with the Charlotte, North Carolina-based Wachovia Bank without first getting the approval of Merrill''s board. An angered board has apparently considered the move as a major breach of corporate protocol.

Merrill''s board is reportedly so upset with O''Neal that it has even discussed the names of potential candidates to replace him. Names discussed include chairman and chief executive of investment firm BlackRock (partly owned by Merrill) Laurence D Fink, and chief executive of the New York Stock Exchange (NYSE) John A Thain.

A Merrill Lynch representative announced today, 26 October 2007, that there has been no contact with any potential merger partners. A Wachovia representative also declined to comment. All indications are that a merger with Wachovia is not on the cards for now.

On Wednesday, Merrill reported a third-quarter loss of $2.3 billion, and said it would have to write-down $7.9 billion on subprime mortgages and complex debt instruments, much more than the $5 billion it had predicted earlier.

Just days before the Merrill board meeting scheduled for Sunday, O''Neal apparently called Wachovia chairman and chief executive G Kennedy Thompson to see whether a merger was of any interest. Thompson apparently expressed interest, but underlined the difficulty of striking a deal.

O''Neal then reportedly asked Merrill co-president Gregory J Fleming to follow up with Thompson. Fleming has a close relationship with Thompson, having represented him on many merger deals.