With Bank of America agreeing to buy out MER for 0.8595 BAC share per 1 MER share, one gets the price of ~22.992. (BAC 26.75*0.8595) Of course, BAC most likely will continue to fall, due to their lowered S&P rating from AA to AA-, which is because of this takeover. In a week, this analysis will be proven right or wrong... With the market the way it is today, and how it will be for the rest of the week, what happens today could be entirely different in two days. However, if you keep an eye on BAC stock, and multiply it by 0.8595, you should have a decent idea of how much MER stock is worth. If you're going to buy this right now, you need to be a day trader - there's no long term happy ending here.
Also note that while BAC and MER have agreed on the deal, the many troubles that have plagued MER will have to be taken over by BAC, meaning that BAC could drop, leading to a MER drop... Quote from MSN money -
"Bank of America will still need to resolve Merrill Lynch's risky assets, including its significant mortgage and commercial real estate portfolios.
Mayo also said the bank could lose revenue as clients look to diversify the location of their financial holdings. There is also the risk of culture clashes between the two firms, Mayo said."
If there was a "neutral" option for this, I'd have selected that, but my best advice is to keep a constant eye on BAC stock, and buy/sell MER accordingly.
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