Bank of America and Merrill Lynch

1177 Words Nov 6th, 2011 5 Pages
Bank of America and Merrill Lynch

Business Combinations:

Dissolution of all but one of the separate legal entities is not necessary in order to have a business combination. A business combination is created when a number of separate organizations are tied together through common control, or an acquirer obtains control over one or more businesses.

Statutory merger: any business combination in which only one of the companies remains as a “survivor” or “parent”.

Statutory consolidation: a business combination in which two or more companies create a new separate entity. The original entities may or may not dissolve in such combination.

Goodwill is an asset representing the future economic benefits arising in a business
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The increases were attributable to issuances and the addition of long term debt associated with the Merrill Lynch acquisition.

F. A statutory merger took place and Merrill Lynch ceased to exist as a separate entity. Merrill Lynch became the wealth management division of Bank of America. Bank of America accounted for the acquisition in consolidated financial statements and accompanying notes.

G. Cost of merger: $29.1 billion. Cost allocations: Common stock acquired: $19.4 billion; preferred stock acquired $8.6 billion; fair value of outstanding employee stock awards $1.1 billion. Bank of America recorded $5.4 billion of goodwill from the combination.

Total purchase price $29.1

Allocation of the purchase price:

Merrill Lynch stockholder’s equity 19.9
Merrill Lynch goodwill and intangible assets (2.6)

Pretax adjustments to reflect acquired assets and liabilities fair value:

Securities (0.9)
Loans (5.0)
Intangible asset 5.8
Other assets/ liabilities (4.8)
Long term debt 15.5 ____ Pretax total adjustments 10.6
Deferred income taxes (4.2) ____ After- tax total adjustments 6.4 Fair value of net assets acquired 23.7 ____ Good will resulting from Merrill Lynch
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