BlackRock Sale Could Bring Merrill Cash
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Friday, June 27, 2008

BlackRock Sale Could Bring Merrill Cash

Now that BlackRock's fund group is all-Dolled up, will it have a new place to go? There is some chance, if the credit crisis continues, the Merrill Lynch will sell some or all of its 49 percent stake in Black Rock, reports the WSJ's Heard on the Street column.

Merrill Lynch CEO John Thain brought up the possibilities of the wirehouse selling off its BlackRock stake or a 20 percent stake it holds in Bloomberg LP, which is worth more than $5 billion, during a presentation to investors at a Deutsche Bank sponsored conference.

The BlackRock stake could raise more than $12 billion if Thain sells it. One complication, though, is that BlackRock's board must agree on any sale that takes place before 2009. Still, BlackRock CEO Larry Fink could possibly see the logic in severing ties to the Merrill distribution channel if it opened doors at the other wirehouses and mutual fund distributors.

Thain's decision on what to do could come relatively soon. On Thursday Goldman Sachs analyst William Tanona and Sanford C. Bernstein & Co. analyst Brad Hintz both revised their predictions for Merrill's earnings downward. Tanona is now predicting that Merrill will lose $2 per share for the second quarter and take write downs of $4.2 billion (he had earlier predicted a profit of $0.25 per share). He also expects Merrill to lose $3.5 billion for the entire year.

Investors responded by dropping Merrill shares 6.8 percent in value on Thursday.

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