Shareholders voted to approve Bank of America's absorption of Merrill Lynch this afternoon, but even before BofA CEO Kenneth Lewis and Merrill CEO John Thain smiled tight-lipped smiles and clinked glasses in celebration of their new lives together, everyone was already gossiping about what a terrible match it was. "Whether Merrill goes down in history as the ultimate catch by one of the banking industry's most aggressive acquirers or a deal to regret is up in the air," the Journal said, and went on to describe the culture clash that is already happening between the fancy New York bankers and their hayseed new relatives in North Carolina.
• "Merrill brokers have teasingly mocked the "spirit points" that Bank of America managers dole out as an employee rewards. The points can be redeemed for golf clubs, televisions and such." Ha, they use coupons?!?! Hicks.
• Greg Donaldson, a Bank of America shareholder and director of portfolio strategy at Donaldson Capital Management in Evansville, Indiana, is skeptical about everyone getting along. "The bankers all think the brokers are too highly paid and the brokers all think the bankers don’t work hard enough,” he told Bloomberg.
• But what's really got everyone worked up is the cost-cutting that will ensue when the merger goes through in 2009. On Wednesday, Ken Lewis told the Charlotte Observer that they were in the “final stage of our analysis” for planned job reductions and that the ax would likely fall after the holidays. They'd like to cut $7 billion, or 10 percent of the combined company's annual expenses, over the next few years, Lewis said; CNBC estimates that about 30,000 heads will roll in the new year.
• The Times suggests that it could be even uglier. "Workers at the soon-to-be-united Bank of America and Merrill are probably hoping that Mr. Lewis doesn’t take a page from Citi’s playbook," they say. If he does, they estimate up to 65,000 people could be cut from the roster.
• And once they get under the covers, Bank of America could be in for a nasty surprise. “There are some hand grenades on the balance sheet that are going to blow up on Bank of America,” said James Ellman, a former Merrill Lynch money manger who is now president of San Francisco–based SeaCliff Capital LLC. “The cost savings are going to be nowhere near what they’ve already promised.”
• Win Smith, the son of one of the founders of Merrill Lynch, Pierce, Fenner & Smith, who approved of the merger, was the grimmest of all. In his toast at the shareholder's meeting this morning, he spoke not as though he were gaining a son but as though he were losing a daughter. In fact, he didn't even really call it a toast, but a 'eulogy':
Today did not have to come … Today is not the result of the subprime mess or synthetic CDOs. They are the symptoms. This is the story of failed leadership and the failure of a Board of Directors to understand what was happening to this great company, and its failure to take action soon enough.
I stand here today and say shame to both the current as well as the former Directors who allowed this former CEO to wreak havoc on this great company.
Shame on them for allowing this former CEO to consciously and openly disparage Mother Merrill, throw our founding principles down a flight of stairs and tear out the soul of the firm.
Well. That's a tough act to follow. Mazel tov, you crazy kids! Where are you registered? Maybe we'll get you some steak knives, so you don't have to tear out any souls with your bare hands.