As Merrill Lynch President Stan O’Neal spoke at his firm’s financial services conference today in New York about the erosion of investor confidence, restoring investor trust, accountability of firms and his firm’s focus on branding, the buzz was all about rumors of Merrill being purchased by UBS PaineWebber’s parent UBS AG.
While O’Neal did not comment about the rumor that was published in a European newspaper, a broker at the conference says O’Neal “wasn’t all that concerned about the rumors.”
“Stan has said in the past that a merger with a bank is not out of the question, but isn’t all that likely either,” the rep says. “I remember him saying that a bank or financial institution interested in buying us has never really made a compelling case and why it would [enhance] our ability to grow.''
Merrill spokespeople declined to comment on the rumor, which resulted in the firm’s shares jumping as much as five percent today.
Brokers and other people in the industry have long believed O’Neal is preparing Merrill for a sale based on the firm cutting 15,000 jobs in the last year as well as O'Neal’s vow to slash costs and focus on more profitable businesses.
There have even been reports that Merrill has had discussions with Goldman Sachs, Deutsche Bank and Bank of America in which a merger or purchase was a topic of conversation.
“We’ve been rumored to be for sale for a long, long time,'' a Merrill producer says. “But I think it's just rumor and speculation.''
Yet another broker says he believes “a sale is possible—but only after we get our house in order, meaning settlements have been reached [in all pending litigation tied to stock recommendations and alleged tainted analysis.]”
While O’Neal did not discuss the rumor of a sale, he did say Merrill’s third-quarter revenue will be below the amount reported in the second quarter. Yet he reiterated that the firm’s “strategy is sound'' and that he’s “never been more confident in the economy.''
To view O’Neal’s speech, click on: http://www.ir.ml.com/downloads/090302_ONeal.pdf