BofA in talks to buy Merrill Lynch

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The fall-out from the Lehman bankruptcy is already gaining momentum. Bank of America, who was a last-minute suitor for Lehman Brothers is now rumored to be looking at a possible acquisition of Merrill Lynch. CEO Lewis has been agressive in picking up assets hammered by the mortgage meltdown, including the fire-sales acquisition of Countrywide in the early days of the credit crunch. This would be akin to doubling-down on the company’s bet that the asset writedowns will be manageable moving forward and will ultimately lead to a massive upside for Bank of America.

From Yahoo!:

Bank of America Corp (BAC.N) is in advanced talks to acquireMerrill Lynch & Co Inc (MER.N) for at least $38.25 billion in stock, the New York Timessaid on Sunday, citing people briefed on the negotiations.

The deal comes as bankers and regulators met in New York to figure out whether to rescue Lehman Brothers Holdings Inc, and if so, how. Those talks seemed increasingly likely to result in Lehman’s liquidation.

Merrill’s talks with Bank of Americaare “advanced,” according to the New York Times, and a transaction valuing Merrill at $25 to $30 per share could be announced as soon as Sunday night, the newspaper said. Merrill shares closed at $17.05 on Friday.

A Merrill Lynch spokeswoman and a Bank of America spokesman did not immediately comment. The Wall Street Journal also reported the talks.

Merrill has been hit hard by the credit crisis and has written down more than $40 billion over the last year.

The bank has also attempted to sell off much of the toxic debt that has been causing the company to hemorrhage capital. Last month, Thain arranged to sell over $30 billion in repackaged debt securities to Dallas-based private equity firm Lone Star Funds.