Merrill Lynch & Co Inc has agreed to sell its 20% stake in Bloomberg LP back to the news and financial data company for about $4.5 billion, The Economic Times reports.
The Wall Street investment bank and brokerage has also decided to retain its 49.8% stake in money manager BlackRock Inc. Merrill spokeswoman Jessica Oppenheim and BlackRock spokesman Brian Beades declined to comment. Bloomberg did not immediately return a phone call and e-mail seeking comment.
Selling the Bloomberg or BlackRock stakes could help Merrill Chief Executive John Thain raise capital to make up for write-downs related in part to subprime mortgages. Analysts on average expect Merrill to report a second-quarter loss of $1.94 per share, its fourth straight quarterly one, according to Reuters Estimates.
Merrill may take write-downs totaling as much as $6 billion, analysts have said, on top of more than $30 billion in write-downs since the third quarter of 2007.
Bloomberg was founded by billionaire Michael Bloomberg, who is now New York’s mayor and still owns about 70% of the company. It is not immediately clear what role, if any, he has played in the Merrill transaction.
Merrill took its stake in BlackRock when it sold the company its investment management business in 2006. It would plan to retain a strategic relationship with BlackRock even if it sold part of the stake, a person close to Merrill said earlier this month.
BlackRock is run by Laurence Fink, once considered a top candidate to run Merrill after the ouster in October of Stanley O’Neal. Thain took the job after previously running NYSE Euronext.
Merrill shares closed Wednesday at $28.00, up $3.31, or 13.4%, as financial stocks rallied broadly. The stock has fallen 47.8% this year.