Bank of America Corp. says it has agreed to swap about $50 billion in stock for Merrill Lynch & Company Inc.
“The price is 1.8 times stated tangible book value,” according to Bank of America, Charlotte, N.C.
The deal agreement calls for 3 Merrill Lynch directors to join the Bank of America board.
Bank of America expects to cut about $7 billion at the combined companies by 2012, the company says.
The directors of both companies already have approved the deal.
The companies hope to get shareholder approvals, and the regulatory approvals needed to complete the deal, by March 31, 2009, the companies say.
The combined company would start with 16,000 advisors from Merrill Lynch and 4,000 from Bank of America.
Bank of America generated about $65 million in non-annuity insurance brokerage fee income in the first quarter, according to Michael White Associates L.L.C., Radnor, Pa.
Bank of America generated about $475 million in mutual fund and annuity fee income during the first quarter, and about $30 million in annuity commissions, Michael White reports.
Merrill Lynch and affiliates have been managing about $1.4 trillion in client assets, and Bank of America has been managing about $589 billion in client assets.
Merrill Lynch once owned a pair of life insurance company subsidiaries, Merrill Lynch Life Insurance Company and ML Life Insurance Company of New York. Merrill Lynch sold those companies to AEGON N.V., The Hague, Netherlands, in 2007.