Merrill Lynch has enhanced its capital position by reaching agreements to raise up to $6.2 billion of newly issued common stock in a private placement with Temasek Holdings and Davis Selected Advisors.
Merrill Lynch expects these transactions to close by mid-January 2008.
“One of my first priorities at Merrill Lynch was to strengthen the firm’s balance sheet, and today we have made great progress towards that by bolstering our capital position through these investments and our announced sale of Merrill Lynch Capital,” says John A. Thain, chairman and CEO, Merrill Lynch.
Temasek Holdings will invest $4.4 billion in Merrill Lynch common stock and has the option to purchase an additional $600 million of Merrill Lynch common stock by 28 March 2008.
However, Its ownership position will at all times represent less than 10% of Merrill Lynch’s outstanding common stock.
Davis Selected Advisors will be making a long-term investment of $1.2 billion in common equity. Both Temasek Holdings and Davis Selected Advisors will be passive investors and will not have any rights of control and have no role in the governance of Merrill Lynch.
“Merrill Lynch is a leading global financial institution, with strong franchises in wealth management, global markets and investment banking. We believe it has an excellent platform with strong growth potential under John’s leadership,” says Manish Kejriwal, senior managing director of investments, Temasek Holdings.
“We look forward to a long partnership with Merrill Lynch’s strengthened senior management team and believe the firm’s unique franchise will continue to drive compelling investment opportunities for us in the future,” adds Ken Charles Feinberg, Davis Selected Advisors.