Merrill Turns Away Private-Equity Offer

"At the end of the year last year, we raised $12.8 billion of new capital and for [2007] we lost $8.6 billion, so we basically raised $4.2 billion of excess capital," Thain said on Merrill's earnings conference call. "That excess capital was intended to reassure the market that we didn't have to come back into the equity markets and give us the capital base to go forward into 2008. And that continues to be the case."

Still Merrill may issue preferred shares if the need arises, Thain said to a group of reporters last week.

Additionally, on Thursday, the company declared a dividend of 35 cents on its common stock.

But according to Sanford Bernstein analyst Brad Hintz, Merrill Lynch on Tuesday had announced the sale of $2.55 billion of perpetual preferred equity.

"Having dismissed the need to raise new common or convertible and having taken the sale of BlackRock(BLK Quote - Cramer on BLK - Stock Picks) and Bloomberg off the table, [Merrill Lynch's] management was running out of options for boosting equity," Hintz writes in a Friday note. "This preferred is certainly not the highest quality equity and though we are concerned about deterioration in the quality of Merrill Lynch's equity base, it does strengthen the firm."

For its part, TPG has been actively eyeing opportunities among banks and brokerages, besides WaMu. It is expected to close a more than $16 billion buyout fund, some of which will be deployed into financial services companies, Reuters says.

TPG declined to comment Friday regarding Merrill Lynch, according to an outside spokesman. A spokeswoman for Merrill Lynch also declined to comment.

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