Merrill Lynch is inching closer to offloading its stake in financial information giant Bloomberg LP, and a blind trust run by Mayor Bloomberg is emerging as the probable buyer, sources tell The Post.
The sale is part of a broader plan by cash-strapped Merrill to raise approximately $50 billion through an array of asset sales, according to bankers who have looked at marketing materials. Merrill owns a 20 percent stake in privately held Bloomberg, and provided seed money in 1981 for the mayor to launch the business. Analysts have pegged Merrill’s stake at between $5 billion and $10 billion.
Last month, Merrill CEO John Thain gave credence to Wall Street speculation that his firm might sell one of its more treasured assets following a deterioration in the value of its balance sheet from mortgage-related losses.
“It is true that there are some liquidity restrictions on BlackRock and Bloomberg, but I don’t believe that that would prevent us, if we decided to, from using either of them as means of raising capital,” Thain said at the time.
Details about the terms of a sale remain sketchy, and sources warned that a deal could still fall apart. However, the two sides are in active negotiations, sources said.
A spokeswoman at Merrill declined to comment, and calls to the Mayor’s office were directed to Bloomberg, where a spokeswoman also declined to comment.
Merrill also is said to be working out ways to sell its 49-percent share in asset-management firm BlackRock, as well as other moves to shore up its balance sheet.
When Bloomberg became mayor in 2002, he put his 68 percent stake in Bloomberg LP into a blind trust. He also gave up running the company.
Sources said that Merrill’s selling its stake back to the mayor’s blind trust could make sense because Bloomberg is the most logical buyer.
At this point, private-equity players are hamstrung due to the credit crisis, and would shy from taking a non-controlling stake in a company. What’s more, the mayor has the right of first refusal on any sale.
Merrill and the mayor have had a longstanding relationship going back nearly 30 years.
And if both sides can reach a deal, it wouldn’t be the first time: Merrill sold a 10 percent stake to Bloomberg about 10 years ago, bringing its share in the financial information services company to the current 20 percent.
Bloomberg’s desktop news and data terminals are believed to generate annual operating profit of about $1.5 billion or better.