Financials

Merrill to Sell Bloomberg Stake For $4.5 Billion

By Charlie Gasparino,|CNBC On Air Editor
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Merrill Lynch, seeking to shore up its capital, agreed to sell its 20 percent stake in Bloomberg back to the media company for $4.5 billion.

However, Merrill has decided not to sell its 49 percent stake in BlackRock.

Owing to recent banking sector turmoil, Merrill has been under pressure to raise capital by selling off various assets, like the Bloomberg stake.

However, Merrill CEO John Thain has faced pressure from rating agencies not to sell the BlackRock stake.

Speculation built over recent weeks that Merrill would seek to drum up capital to help it to cover writedowns and an expected loss for the second quarter that will be announced after the market close on Thursday.

The consensus among senior executives at Merrill is that the writedown for losses in the second quarter will be above $6 billion.

One senior executive told CNBC that it would likely total $6.5 billion. That final tally is still subject to change, however, as Merrill continues to look at its exposure to risky debt and how much money it has on hand to cover losses.

Analysts on average expect Merrill to report a second-quarter loss of $1.94 per share, its fourth straight quarterly one, according to Reuters Estimates.

Merrill has already taken more than $30 billion in write-downs since the third quarter of 2007.

Bloomberg was founded by billionaire Michael Bloomberg, who is now New York's mayor and still owns about 70 percent of the company.

It is not immediately clear what role, if any, he has played in the Merrill transaction.

Thain told investors last month that Merrill's 20 percent stake in Bloomberg was worth roughly $5 billion to $6 billion.

Merrill took its stake in BlackRock when it sold the company its investment management business in 2006.

It would plan to retain a strategic relationship with BlackRock even if it sold part of the stake, a person close to Merrill said earlier this month.

BlackRock is run by Laurence Fink, once considered a top candidate to run Merrill after the ouster in October of Stanley O'Neal.

Thain took the job after previously running NYSE Euronext .

-- Reuters contributed to this report.