Merrill Lynch came close to selling its 49 percent stake in BlackRock, but pulled the plug at the last minute because of concerns from rating agencies.
Merrill, seeking to shore up its capital, already agreed Wednesday to sell its 20 percent stake in Bloomberg back to the media company for $4.5 billion.
Now sources tell CNBC that Merrill had alerted BlackRock that it was going to sell part or all of its stake in that firm, and Blackrock had an unofficial deal to sell the stake once again to a third party.
Owing to recent banking sector turmoil, Merrill has been under pressure to raise capital by selling off various assets, such as the Bloomberg stake.
But the deal unraveled when Merrill presented the plan to rating agencies, which said selling BlackRock could result in a downgrade because the firm is considered a core asset for Merrill, unlike Bloomberg, which is a passive investment.
That's when Merrill's CEO John Thain reversed himself, and then began looking for assets to sell in addition to the 20 percent stake in Bloomberg, which he will received around $4.5 billion, to make up for the expected writedown of possibly $6.5 billion.
Merrill declined to comment.
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. The 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.
Merrill has already taken more than $30 billion in write-downs since the third quarter of 2007.
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.