thedeal.com, 15 Sep 2008, George White
At first glance, it looked as if the shotgun marriage of Merrill Lynch & Co. with Bank of America Corp. had bailed out Temasek Holdings Pte. Ltd., who had poured nearly $6 billion into the investment bank this year, only to watch the value of its stake evaporate.
The Singapore government-controlled entity is Merrill's largest shareholder with a 7.5% stake. Temasek put $5 billion into Merrill at $48 a share between December and February, but a reset payment for losses on the original investment and additional $900 million poured in last month ended up averaging out the sovereign wealth fund's buy-in price to only $23.11 a share, based on Bloomberg calculations from exchange filings.
At Bank of America's orginal estimate of $29 a share, Temasek would have ended up making $1.5 billion on its investment. Unfortunately, the markets haven't been kind to the stocks of either BofA or Merrill. At the end of the day, Bank of America was down $7.19 or 21.3% to close $26.55, while Merrill Lynch only gained a penny at close, ending the day at $17.06 a share, leaving Temasek's investment still well into the loss column.
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Related News:
Temasek could profit on Merrill takeover: economist - AFP, 16 Sep 08
Temasek Is Still Sitting Pretty With Its Stake in Merrill - The Wall Street Journal, 16 Sep 08
Merrill takeover may be a boon for Temasek - Business Report, 16 Sep 08
