January 19, 2007
Merrill Lynch and the HCA Deal
How can this be good? Merrill Lynch has disclosed breathtaking fourth quarter earnings. A chunk of those earnings came from the HCA buyout. Merrill got fees from advising HCA pre-buyout, took an $1.5 billion equity stake in the buy-out group, earned $75 million in fees advising the buyout group, and now is underwriting $22 billion in bank loans and junk bonds (with a 7% underwriters fee on the public offerings). Conflicts of interest are everywhere. Reminds me of the dealings of Andrew Carnegie in 1870s (held positions in railroads, iron & steel companies, bridge companies, all dealing with each other, and sold bonds in each to boot).
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