Merrill Turns Away Private-Equity Offer

Merrill LynchMER earlier this week "rebuffed" an offer from private-equity firm TPG to provide an equity investment, but the two firms discussed other ways to do business together, sources familiar with the matter said.

Executives from both firms, including Merrill CEO John Thain and president Greg Fleming and TPG's David Bonderman, met in New York on Monday, The Financial Times reported.

TPG had expressed interest in injecting capital into troubled Merrill Lynch, but it was "an offer Merrill rebuffed," according to Reuters. The two firms also discussed ways in which the two could do business together including co-investing in private-equity deals and business expansion in China and Russia, according to sources.

Merrill Lynch last year raised $12.8 billion in December and January through private-equity investments and private placements, making it one of many financial firms, including CitigroupC, WachoviaWB and National CityNCC, forced to raised capital as the credit crisis lingers.

TPG itself led a group of investors that injected $7 billion into Washington MutualWM earlier this month.

Meanwhile this week, Nat City received its own $7 billion capital infusion earlier from investors led by Corsair Capital.

The news of TPG approaching Merrill comes a week after the firm reported a first-quarter net loss from continuing operations of $1.97 billion, of $2.20 a share. The losses were fueled by roughly $6.6 billion in writedowns on securities backed by subprime and other mortgage-related assets as well as leveraged loans.

Thain had reiterated on the company's conference call that the brokerage firm remains well capitalized and does not have plans to raise additional common equity.