American investment bank Merrill Lynch is in negotiations to sell its 20 per cent stake in financial data and news firm Bloomberg, as it seeks to raise more cash to firm up its balance sheet.
Talks with the firm’s founder and New York mayor Michael Bloomberg are still at an early stage, according to those close to the negotiations. Merrill has held its stake for two decades.
Although the 20 per cent holding has no official value, Merrill’s new chief executive John Thain has suggested it is worth $6bn (£3bn), a figure that would give Bloomberg a notional value of $30bn.
Merrill is trying to sell off assets to shore up its balance sheet, which has been severely damaged by the global credit crunch and the American sub prime mortgage crisis. The bank has raised $15bn since Thain took over as chief executive in the Autumn.
Ironically, the investment bank could help Bloomberg finance a buyback of the stock. It is thought Bloomberg is unlikely to waive its rights to the share in favour of a private equity buyer.
The two firms have been closely linked since the firm’s inception in 1981 when Merrill helped provide the seed funding for Bloomberg to launch.
Thain is also mulling a sale of Merrill’s 49 per cent stake in American investment managers BlackStone, which is worth around $10bn.
“There are some liquidity restrictions on BlackRock and Bloomberg, but I don’t believe that that would prevent us from using either of them, if we decided to, as means of raising capital,” he said in a conference call last month.