Lehman files for bankruptcy and will almost certainly be liquidated. No big surprise there; I myself predicted as much when the markets closed on Thursday. Shares were trading at $7 then; they are worth 22 cents now (more likely zero, because of the bankruptcy).
But Merrill Lynch selling to Bank of America?! OMGWTF!?
On two fronts:
1) I didn't think Merrill Lynch was in such bad shape as to sell. Guess things must be worse than they look from the outside.
2) Just eight months ago Bank of America said they were scaling back in the commercial and investment banking business. Guess they changed their mind.
Keep in mind that Lehman was founded in 1850 and Merrill was founded in 1914 (and Bear Stearns was founded in 1923). All of these firms survived the Great Depression, and now they're gone in the events of the last year. That's a little scary.
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Min Euoo Sung, CEO of Korea Development Bank, said Lehman Brothers rejected a bid of $6.40 a share for a controlling stake - the amount undisclosed - in the US investment bank weeks before it filed for bankruptcy. The negotiations collapsed because Lehman was seeking $17.50 per share, Min said, and also because of resistance from the government in South Korea.
Well, no wonder Lehman went broke. Apparently they didn't know that $6.40 is better than 22 cents.
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