Why BAC buys MER for $29 not LEH for <$5

Discussion in 'Trading' started by newguy05, Sep 14, 2008.

  1. I really dont understand this. I know MER's book is better than LEHs. But they are paying $29!!! Why didnt they just buy LEH's for 10 times less, which has a good brokerage (what bac wants) as well.

    makes no sense.
  2. Because MER got rid of alot of their toxic paper not long ago 22cents on the dollar ... and im assuming Mer has more systematic risk to the financial system than leh.. so the Fed probably offered some sort of a back stop.

    Lehman was still holding on to alllllllot of it.
  3. bgp


    merrill financed that 30 billion itself. which means the buyer could walk and BOA will be stuck.

  4. what will mer open on monday
    I had $300 share, s long and i wanted to get the fuck out at the open
    I hate financial,s i am holding it from $34:(
  5. I would say merrill opens at 26 - 27
  6. Agreed. 28 would be the high side.

    Take your lumps and move on.

    Be happy you're not short millions in the 17 - 20 area as many are.
  7. Thank you
    Should i wait for 9.30 to sell the shares right or can i sell them before. the market open
    I know a lot of people who were short in MER so they will have to come out to cover casue they were all expecting the stock to go to $12 I had lost hope my self and decided i will dump everything in the open on monday
    Also i have Option (Leaps ) on MER JAN 2010 , ( 50 call ) My average price is $2.00 which were trading at $0.50
    Will they change and what happens if i want to keep them since BOA is buy MER
    Thank you for your answer as i am new to it
  8. Your LEAPS are dead.
  9. MER buyout had to be done at a premium. Futures are "only" down 300 and spin doctors will use the MER buyout to prop / push financial stocks, and buoy the markets.

    "Look -MER was UNDERVALUED" I can hear it now :)

    Without this financial stocks would be in free fall tomorrow. With this we probably see gaps being bought on stronger firms in the morning.

    Who knows - if markets other than equities aren't totally fubar tomorrow we could even go green.

    Strange days.
  10. agreed - they could have got leh for free and sounds like if they waited a few, cough cough, days, they could hav egot merrill for free too.
    #10     Sep 14, 2008