Merrill collects $25M on its way to oblivion…

December 5, 2008

A short time ago, shareholders of Merrill Lynch (MER) approved the firm’s “merger” with Bank of America (BAC), according to this brief snippet from the WSJ, “ending the Wall Street firms storied 94-year history as an independent company.”

But things aren’t all that bleak, judging by a careful reading of some of the recent merger documents, which a tipster brought to my attention earlier this week. That’s because according to this filing from Nov. 3, MLPFS stands to collect $25 million “payable upon the consummation of the merger”. And who is this MLPFS? Here’s what the filing says:

“MLPFS is an internationally recognized investment banking firm with substantial experience in transactions similar to the merger. Merrill Lynch selected MLPFS as its financial advisor because of MLPFS’s qualifications, expertise and reputation. MLPFS is a wholly owned subsidiary of Merrill Lynch. Certain members of management of MLPFS are also members of management of Merrill Lynch and have interests in the merger that are different from, or in addition to, the interests of stockholders of Merrill Lynch

Of course, that was buried on pg. 62 of a fairly lengthy filing, so you definitely would have had to be looking for it. Equally interesting, according to the tipster, is that while Merrill gives lots of fairness opinions on all sorts of mergers, it doesn’t usually do it under the MLPFS moniker. And, there’s also the fact that Bank of America retained two other companies — Fox-Pitt and J.C. Flowers — to issue fairness opinions, in addition to using their own folks.

There was also this 8K filed by Bank of America on Nov. 21, which provided some further information on the hiring of MLPFS: “MLPFS is a wholly-owned subsidiary of Merrill Lynch, and thus its employees have actual or potential financial interests in the merger, including the prospect of continued employment with the successor entity after the close of the proposed merger.”

Just another reason why fairness opinions sometimes seem like they’re not exactly fair.

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