is exploring selling a large stake in Merrill Lynch Investment Managers
to Baltimore-based money manager Legg Mason
, according to bankers familiar with the deal.
The New York Times
the news on Thursday morning, with Bloomberg News
The entire unit could go for $6.4 billion, Bloomberg News
reported Alistair McKay of Credit Suisse First Boston as saying. MLIM reported net revenue of $412 million in the first quarter.
Merrill Lynch Investment Managers spokeswoman Megan Ochampaugh was unavailable for comment.
There may be many reasons why such a move would make sense for Merrill Lynch. Industry watchers say the growing regulatory burden could be a factor.
Richard Strauss, a Deutsche Bank analyst, wrote in a research brief that MLIM head Robert Doll
"indicated in a meeting that a more independent ownership structure of Merrill Lynch Investment Managers may help reduce 'regulatory conflicts' at the company," reported Bloomberg
and the Times
The sale could solve multiple conflicts of interest within the diversified financial services firm, one of which is the conflict that exists between Merrill's extensive broker network and their sale of in-house funds.
Another area where a sale would provide relief is the accusation that investment banks pump their related fund arms full of their own initial public offerings, a recent target of SEC scrutiny.
MLIM's workforce was reduced to approximately 2,600 from 4,000-strong only a few years ago, Bloomberg
reported Strauss as saying.
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