Fortune senior editor at large Carol Loomis writes Thursday that Merrill Lynch is considering selling its 20 percent stake in Bloomberg LP, which operates a business news service.
Loomis wrote, “Talking to Wall Street analysts about the company’s abysmal third-quarter results, CEO Stanley O’Neal and chief financial officer Jeff Edwards said they would be looking hard at possibly selling some of their ‘non-core assets.’ No specifics were provided, but Bloomberg would definitely have to be labeled non-core.
“Moreover, analyst Mike Mayo of Deutsche Bank gave O’Neal a chance to say Merrill and Bloomberg would never part, and O’Neal didn’t bite. Mayo asked straight on whether Merrill might consider selling its Bloomberg holding and included another Merrill asset, a nearly 50 percent interest in BlackRock, in the question. O’Neal proceeded to extol Merrill’s BlackRock holding, but said nothing – zero – about Bloomberg.
“Merrill’s 20 percent stake in Bloomberg would be worth at least $4 billion based on Fortune’s estimate, included in its recent article ( “Bloomberg’s money machine,” April), that Bloomberg LP is worth at least $20 billion.
“Merrill carries its Bloomberg stake on its books at an amount that is undisclosed, but appears to be far below $4 billion. This suggests that a sale of the stake – or a revaluation of this holding without a sale – would add several billions to Merrill’s stockholders equity, which at the end of June was $42 billion. That figure could stand a nice boost, because in recent months it has had to absorb the company’s huge fixed-income losses.”
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