Bank of America buying lots of Merrill Lynch baggage

CHARLOTTE, N.C. — On a day that saw Wall Street chieftains and U.S. officials scrambling to shore up the financial system, Bank of America Corp. on Sunday swooped in to buy brokerage and investment banking giant Merrill Lynch, only hours after officially dropping out of the race to buy battered Lehman Brothers.

The Charlotte bank reached an agreement to buy Merrill for $50 billion, a person familiar with the situation said.

With that, Bank of America lands the nation's biggest fleet of stockbrokers and bulks up an investment bank that has never been among Wall Street's elite. But such a deal could bring a challenging integration and more exposure to the nation's mortgage crisis.

The deal is the latest bold purchase by Bank of America chief executive Ken Lewis, who has created a banking behemoth that dominates retail banking, credit cards and mortgages. With Merrill Lynch, he plants his company more firmly in the nation's banking center of New York and can reach more customers through a retail brokerage force that can sell investments and banking products.

As for Merrill Lynch CEO John Thain, "it was the best deal he could cut for shareholders," said analyst Nancy Bush of NAB Research in New Jersey.

In a deal worth about $29 for each Merrill Lynch share, Lewis is paying a premium over Friday's closing price of $17.05, but less than the $70 height the stock has fallen from over the past year.

Bank of America shares closed yesterday at $26.55, down $7.19, or 21.31 percent.