Bank of America Said to Buy Merrill for $44 Billion (David Mildenberg, Bradley Keoun)

Sept. 14 (Bloomberg) -- Bank of America Corp. agreed to buy Merrill Lynch & Co. in a deal that values the 94-year-old firm at about $44 billion after its shares plummeted in the past week, two people familiar with the deal said. 

The companies' boards approved the merger agreement this evening, according to the people, who declined to be identified because the deliberations were private. Payment will be in Bank of America stock, one of them said. The $29-a-share purchase price, while 70 percent below the stock's January 2006 record, is 70 percent more than the closing price of $17.05 in New York trading on Sept. 12.

Merrill, the third-biggest U.S. securities firm by market value, agreed to the sale after a weekend of talks at the Federal Reserve Bank of New York about the fate of smaller rival Lehman Brothers Holdings Inc.

By Sunday evening in New York, Lehman was preparing to file for bankruptcy, wounded by a credit crisis that has forced the world's biggest banks to book more than $510 billion of writedowns. Merrill's sale, in the wake of Bear Stearns Cos.' collapse in March, may leave Goldman Sachs Group Inc. and Morgan Stanley as the only survivors among the five biggest independent investment banks on Wall Street.

"A merger between Merrill and Bank of America is a good idea," said Richard Bove, an analyst at Ladenberg Thalmann & Co. in Lutz, Florida. "If Lehman fails, the next bank to be attacked would be Merrill. They are attempting to forestall that attack by linking with Bank of America."

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