Lehman - Done & Merrill - Sold

12:05 pm : Stocks are sharply lower after Lehman Brothers (LEH 0.16, -3.49) filed for bankruptcy, Merrill Lynch (MER 20.71, +3.66) agreed to sell itself to Bank of America (BAC 28.33, -16.03) and reports indicate that AIG (AIG 4.32, -7.82) is desperate for capital.

At midday stocks are approaching opening lows, although they are not down as much as feared. Weakness is broad-based, with all ten economic sectors posting a loss.

Lehman Brothers filed Chapter 11 bankruptcy protection after no buyers were willing to save the troubled 158-year-old firm due to a lack of a government backstop. None of Lehman's broker-dealer subsidiaries will be included in the bankruptcy and will continue to operate. Lehman listed $613 billion in debt, which is the largest bankruptcy on record according to reports.

Merrill Lynch agreed to be sold to Bank of America in an all-stock deal for $29 per share, or $50 billion, a 70.6% premium to Friday's closing level. BofA said it was willing to pay the premium because the benefits were appealing and it still believes it is a compelling price, noting there was the possibility that others were interested. According to the Wall Street Journal, the move came after federal officials "strongly encouraged" the sale due to concern that the firm was approaching failure. Fed officials may have encouraged the deal, although BofA CEO Lewis said there was no “pressure” from regulators.
Finance.Yahoo 9/15/08 9:14am

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