I think we all know the answer to that one. Thain took a look at Merrill's book and knew that it couldn't survive any further write downs without completely diluting (aka wiping out) the equity holders and sovereign funds. I mean they had already diluted them out to the tune of 30%.
Anyway, I was stunned to hear how quickly this deal was finalized. It happened so fast that even Thain doesn't know what his official role will be yet.
Thain said he contacted Bank of America Chairman and Chief Executive Ken Lewis Saturday morning and proposed a merger as concerns swirled over whether Merrill could meet the same fate as Lehman. Thain said the deal made strategic sense, and Lewis said he was interested immediately, adding that Merrill could have easily gone elsewhere for a merger partner.
"Better to seize on this opportunity as we see it in the moment," Lewis said. He added later: "It didn't take but about two seconds to see the strategic implications, the positive implications."
The question now becomes: Did Lewis even really inspect Merrill's books before diving in? Given Lewis's rash decision to buy Countrywide, I wouldn't be surprised if Lewis said yes in two seconds.
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