ended the session higher Wednesday, despite word from the company that quarterly revenue will probably decline sequentially, as new speculation emerged that the investment bank is an acquisition target.
Merrill closed up $1.49, or 4.4%, at $35.67. According to a report in the German press, Swiss banking group
has been considering a move to take over Merrill. UBS, which acquired
in 2000, denied the report.
Earlier this year, Hong Kong's
was named a potential suitor for Merrill, but that rumor didn't have much staying power. Still, with Merrill's stock well below its 52-week high of $59.32, it probably shouldn't come as a surprise that the company is again the subject of acquisition gossip.
Merrill has been at the center of a series of governmental probes into Wall Street's practices this year, and the company's stock, along with the shares of other investment banks, has paid the price. Merrill ultimately gave $100 million to New York and other states to settle allegations that the firm's analysts privately disparaged certain companies while publicly encouraging investors to buy their securities.
The prospect of a buyout invigorated investors and allowed them to overlook cautious words from Merrill President Stan O'Neal. Speaking at a financial services conference, O'Neal said revenue in the third quarter will decline from the second quarter, when the company posted a top line of $4.95 billion. On average, analysts polled by First Call were already expecting as much and are looking for revenue of around $4.77 billion in the third quarter.
O'Neal also said that even though Merrill's reputation has suffered with the increased regulatory scrutiny, the company is well-positioned for the long term. O'Neal is set to replace David Komansky as chief executive in December.
Separately, Merrill announced that Barry Friedberg, the chairman of global markets and investment banking at the firm, will leave his position on Feb. 1. Friedberg, an executive vice president and a member of Merrill's executive management team, has been with the company for 38 years.