Brokerage firm Merrill Lynch & Co. is getting into the energy trading business made notorious by Enron.

Merrill announced today that it has entered into a definitive agreement to acquire the energy trading businesses of Entergy-Koch LP, a joint venture of Entergy Corporation and privately-owned Koch Energy Inc., a subsidiary of Koch Industries, Inc.

Merrill says that the transaction will position it as a leader in energy trading, expanding the firm’s product offering to institutional investor and corporate clients. EKLP has focused its trading activities primarily on natural gas, electricity and weather-related contracts. Merrill anticipates making future investments to expand the business into other aspects of energy trading.

The transaction is expected to close in the fourth quarter. Upon closing, the acquired energy trading business will operate as the Global Commodities group, a wholly owned unit within Global Markets & Investment Banking and current Entergy-Koch Trading management will continue to run the integrated business. The transaction is expected to be accretive to Merrill Lynch’s 2005 earnings and earnings per share without assuming any synergies.

Standard & Poor’s Ratings Services says that the deal will have no effect on its ratings on Merrill. The deal will be funded with internal cash and will add a modest amount of goodwill, it said. “Standard & Poor’s does not view the financial impact of this acquisition as material, although the elevated risks associated with energy trading will be a subject that will bear close monitoring,” it cautions.

“This acquisition may be the beginning of a buildout of the energy trading business in general. While Merrill is not acquiring the hard assets associated with the natural gas pipeline and storage business, Standard & Poor’s will discuss the likelihood of future acquisitions and investments in this area,” it says.

“The ratings on Merrill are based on the strength of its retail and institutional franchises, which include global markets, investment banking, investment management, and private client services. Earnings for the first half of this year have been the highest in the firm’s history and demonstrate a significant turnaround relative to the downturn of 2001-2003,” S&P says.