Chapter 603 Standard Chartered Merrill Lynch

Chapter 603 Standard Chartered-Merrill Lynch

According to the merger agreement urgently signed by Merrill Lynch and Standard Chartered Bank, Standard Chartered Bank will acquire Merrill Lynch for a total price of US$40 billion, including US$25 billion in cash and issuing new shares worth US$15 billion to Merrill Lynch shareholders to complete this acquisition.

This acquisition price is more than 50% higher than the market value corresponding to the closing price of Merrill Lynch on the previous trading day.

This offer is obviously beneficial to Merrill Lynch.

This is one of the reasons why Merrill Lynch quickly finalized the transaction with Standard Chartered Bank after contacting several potential buyers in succession.

Previously, Bear Stearns and Lehman Brothers missed the best time for the transaction, and the shareholders were unable to transfer their shares normally, suffering heavy losses. This undoubtedly increased the sense of urgency of Merrill Lynch shareholders and prompted them to quickly reach a deal.

After the acquisition is completed, all of Merrill Lynch's shares will be exchanged for cash and Standard Chartered Bank shares, and Merrill Lynch will be delisted from the stock market.

According to Barron's plan, after the completion of this merger, Standard Chartered Bank will be renamed Standard Chartered-Merrill Lynch Group, and some of Merrill Lynch's overseas businesses will be incorporated into Standard Chartered Bank, while in the United States, it will still conduct investment banking business under the name of "Merrill Lynch".

Prior to this, Standard Chartered Bank also had both commercial banking and investment banking businesses, but its business was mainly concentrated in emerging markets such as Asia, Africa and Latin America. After acquiring Northern Rock Bank, Standard Chartered Bank expanded its commercial banking and investment banking businesses in the UK. Now, through the acquisition of Merrill Lynch Group, they will also enter these main businesses into the North American market.

You should know that Merrill Lynch Group is a bank with a relatively prominent brokerage business, with 16,000 financial advisors. Through the acquisition of Merrill Lynch, Standard Chartered-Merrill Lynch Group will not only enter the commercial banking and securities business in the United States, but its own brokerage business income will also increase greatly, and the proportion of non-interest income will be further increased.

Merrill Lynch Industrial Bank, a commercial bank owned by Merrill Lynch, will also be incorporated into the system of Standard Chartered Bank, so that it has a large number of business institutions and depositors in North America.

It is worth mentioning that before this acquisition, Standard Chartered Bank's market value has reached 60 billion US dollars, and its stock price has increased by more than 30% compared with last year! Its scale has increased by 1.5 times in the past four years, and the assets controlled by Standard Chartered Bank are close to 600 billion US dollars.

This also makes Standard Chartered Bank the fourth largest listed bank in the UK, ahead of HSBC Holdings, Royal Bank of Scotland and Barclays Bank.

Standard Chartered Bank's acquisition of Merrill Lynch Group will be provided with 25 billion US dollars of financing funds by British Fortune (BFT Fund) to purchase Standard Chartered Bank's 25 billion US dollars of convertible bonds, and issue new shares worth 15 billion US dollars to Merrill Lynch Group.

After the acquisition, the original shareholders of Merrill Lynch Group will hold about 20% of Standard Chartered-Merrill Lynch Group's shares (of which Caesar Fund's shares in Merrill Lynch Group will be exchanged for about 1.7% of Standard Chartered-Merrill Lynch Group shares, and some cash).

After the acquisition, DS Holdings will hold 52% of Standard Chartered Merrill Lynch; Rich23 Capital will hold 12%; and Caesars Fund will hold 1.7%.

Barron currently still controls 65.7% of Standard Chartered Merrill Lynch.

In addition, Cavendish Trust owns 25 billion pounds of convertible bonds of Standard Chartered Merrill Lynch; BFT Fund also holds 25 billion US dollars of convertible bonds of Standard Chartered Merrill Lynch.

After these bonds are converted into Standard Chartered Merrill Lynch shares in due time, Barron's holdings in Standard Chartered Merrill Lynch will also increase significantly.

In fact, for the listed companies he previously controlled, one of the main ways of capital operation during this subprime mortgage crisis was to start reducing holdings when the stock price was high before, and then provide funds to these companies in the form of convertible bonds to carry out acquisitions and expansions after the subprime mortgage crisis gradually broke out.

Then when the stock price is low, convert the convertible bonds into the company's common stock to significantly increase the proportion of shares in these listed companies he controls.

After this process, a cycle of "selling high and buying low" is completed.

At present, Standard Chartered Bank has signed an acquisition agreement with Merrill Lynch and obtained the approval of the boards of directors of both parties.

Of course, this agreement still needs to be approved by the EU and the US government, and then this huge merger and acquisition plan will begin.

…

At the same time that Standard Chartered Group and Merrill Lynch reached an agreement, it meant that Lehman Brothers' only life-saving straw at this time was Barclays Bank.

At this time, Barclays Bank had no investment banking business. In order to enter the American market, they had previously stated that they were willing to acquire Lehman Brothers after stripping off toxic assets for US$10 billion.

As mentioned before, in order to survive this bankruptcy crisis, Lehman Brothers' CEO Fuld proposed a split plan - he planned to strip out Lehman Brothers' problematic assets and other assets involving mortgages to form a "bad bank"; merge the best assets and high-quality businesses into a "good bank".

Financing through the sale of "good banks" to inject capital into "bad banks".

At that time, the Development Bank of South Korea was interested in Fuld's plan and made an offer to acquire Lehman Brothers.

They had the opportunity to reach a cooperation, but Fuld disliked the other party's offer as too low, and the negotiations between the two sides have been deadlocked.

So a few days later, South Korea's financial regulator criticized the deal, which directly led to the Development Bank of South Korea giving up the acquisition.

However, now that the hope of selling Lehman Brothers as a whole to Standard Chartered Bank has failed, they can only pick up this plan and negotiate with Barclays Bank...

On July 13, the day after Standard Chartered Bank terminated the acquisition of Lehman Brothers, US Treasury Secretary Paulson and Geithner came to the conference hall and announced a good news that everyone in the meeting knew. Last night, Barclays Bank of England formulated a complete plan to acquire Lehman and was ready to implement it.

The only obstacle now is that the plan requires other banks to provide sufficient funds to finance Lehman Brothers' non-performing assets, a total of about 33 billion US dollars.

Geithner asked the bigwigs present to give a number and formulate a detailed investment plan.

Barclays' enthusiasm for acquisition gave the bigwigs full confidence. Except for Merrill Lynch (which has been confirmed to be acquired by Standard Chartered Bank) and Bear Stearns (which has been acquired by JPMorgan Chase), which clearly stated that they were unwilling to invest, other bankers gathered in a circle and began to subscribe for capital shares. Among them, JPMorgan Chase's CEO Dimon was the most active.

JPMorgan Chase said that they were willing to put up $1 billion to finance Lehman Brothers' non-performing assets...