Merrill Lynch looks to shed assets

The Wall Street giant said Wednesday that it would consider selling 'non-core assets,' which must include Bloomberg LP, writes Fortune's Carol Loomis.

By Carol Loomis, Fortune senior editor at large

(Fortune) -- Merrill Lynch all but hung a "For Sale" sign today on its 20 percent holding of Bloomberg LP, the financial information company.

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 (Charts, Fortune 500) 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 (Charts), 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.

Merrill owns its Bloomberg stake because in the early days of Bloomberg LP, when Mike Bloomberg was struggling to get this operation off the ground, he traded part of the company for financing from Merrill.

Mayor Mike himself owns close to 68 percent of the company. For all concerned, it's been a very neat investment. Top of page