Merrill Lynch President Stan O’Neal spoke at his firm’s financial services conference today in New York about the erosion of investor confidence and restoring investor trust. But the buzz was all about a report in a German newspaper that UBS AG had made an offer for Merrill.
O’Neal did not comment about the rumor, published in Boersen-Zeitung, but the rank-and-file say that O’Neal is unlikely to be upset or surprised if it were true.
"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. Few have any evidence to point to, but brokers say that O’Neal seems more than focused on profitability (i.e. cost cutting), that he seems to be gussing up the franchise to attract a suitor, such as the tighter focus on its 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.''
While O’Neal did not discuss a possible 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.''
Click here to view O’Neal’s speech.