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Bank of America buys Merrill - $50 billion

Soon after its talks to acquire Lehman Brothers broke down, Bank of America moves to scoop up Merrill Lynch.

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Merrill Lynch CEO John Thain leaves The Federal Reserve Bank of New York Saturday following meetings with other bank executives and regulators aimed at ending the Lehman Brothers crisis.

NEW YORK (CNNMoney.com) -- Bank of America said Monday that it has bought Merrill Lynch in an all-stock deal valued at as much as $50 billion.

The purchase price would value the company at more than $29 a share, at least a 70% premium from Merrill's closing price on Friday of $17.05.

The acquisition was put together Sunday as Wall Street awaited the fate of battered investment bank Lehman Brothers (LEH, Fortune 500), which early Monday said it would file for bankruptcy.

Throughout the weekend, Bank of America (BAC, Fortune 500) was considered a potential acquirer of Lehman, though those discussions had broken off by Sunday afternoon.

Like Lehman, Merrill Lynch (MER, Fortune 500) has been suffering from bad real estate bets and its stock price has been punished severely, losing 27% last week. Shares are down 65% this year.

Concerns had been growing that Merrill would need to take more writedowns and raise more capital to shore up its balance sheet. Merrill has posted net losses of more than $17 billion over the past four quarters.

"The Merrill deal addresses what the market fears most right now - a flood of assets hitting the market," said David Alpert, managing director of Westwood Capital.

A spokesperson for Merrill Lynch would not comment. Attempts to reach Bank of America for comment were unsuccessful.

Bank of America is the nation's No. 3 bank holding company in terms of assets, behind only Citigroup and JPMorgan Chase. It is the largest by market value.

Bank of America CEO Kenneth Lewis has a history of making bold acquisitions, including most recently, Countrywide, the troubled mortgage lender. That purchase has so far exceeded expectations, with Bank of America saying recently that Countrywide would add to its earnings this year.

Some consider Merrill Lynch, and its massive retail brokerage operation, a better fit for Bank of America than investment bank Lehman would have been.

Despite its troubles, Merrill still has the most extensive retail brokerage operations of the major Wall Street firms. To top of page

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