Over the past few years, one of Wall Street's favorite parlor games has been betting on who will buy Merrill Lynch ( MER). At various times, speculation has centered on HSBC ( HBC), Bank of America ( BAC), Bank One ( ONE) and even Wells Fargo ( WFC). Even though the bear market has taken a big bite out of Merrill's hide, it remains an attractive catch because of its huge retail brokerage operation, wealthy asset-management clientele and investment bank. At the same time, it's seen as needing a mate, because it remains a laggard in fixed-income trading and corporate lending. But to date, while there's been flirting, there's been nothing close to a full-blown courtship. Merrill, for now, appears dead-set against a merger, for a variety of reasons. Earlier this year, sources say, the nation's biggest brokerage rebuffed an overture from ING Group ( ING), the Dutch-based banking and insurance conglomerate, which is looking to build on the success of its ING Direct online bank. Neither ING nor Merrill would comment. But an investment-banking source said ING approached Merrill about a possible deal sometime this year, and was rebuffed. Lawyers familiar with the talks said it was ING that broke off the negotiations.
Wall Street analysts say Merrill's coy mistress act shouldn't have surprised ING. They say a deal is especially unlikely now, after Stanley O'Neal, the firm's chief executive and president, assumed the title of chairman, following the April retirement of David Komansky. It's a chance for O'Neal, who has been slashing payroll and expenses with vengeance for two years, to start putting his vision of a leaner and more nimble Merrill to work. "I would bet my bonus that Merrill is not for sale," said Sanford Bernstein brokerage analyst Brad Hintz.