Merrill Lynch & Co. announced today it will buy San Francisco-based wealth manager First Republic Bank for US$1.8 billion in cash and stock.

With of assets $10.7 billion, First Republic provides investment services including trust banking and luxury home lending through 43 offices in the U.S.

Merrill Lynch and First Republic Bank said that they have entered into a definitive agreement for Merrill Lynch to acquire all of the outstanding common shares of First Republic in exchange for cash and stock valued at a fixed price of US$55 per First Republic share, subject to shareholder elections, for a total transaction value of US$1.8 billion.

The deal is expected to be completed in the third quarter of 2007, pending regulatory approvals and approval by First Republic shareholders.

First Republic will operate as a stand-alone brand within Merrill Lynch and will retain its name, its current management structure, its San Francisco headquarters and its client and community focus.

First Republic will continue to operate its business separately as a new division of Merrill Lynch Bank & Trust Co., FSB. Jim Herbert and Katherine August-deWilde will continue their leadership roles, as chairman and CEO and president and COO, respectively.

Members of the current board of directors of First Republic will serve as the division’s Advisory Board and will continue to be chaired by the Bank’s current chairman, Roger Walther.

“We are very pleased that First Republic will join Merrill Lynch as a separately run business that will enable us to enhance the growth of our private client organization by leveraging First Republic’s very successful business model and strategy,” said Robert McCann, president of Merrill Lynch’s Global Private Client business. “First Republic will enable Merrill Lynch to accelerate its strategic objective of growing its high net worth business. Our goal is to provide First Republic with the resources and support to replicate the firm’s success in key markets across the country and to benefit from its deep banking expertise.”


As of Sept. 30, 2006, First Republic had assets of US$10.7 billion, loans of US$7.6 billion, deposits of US$7.9 billion and assets under management or administration of US$16.4 billion. Net income available to common shareholders was US$46.3 million for the nine months. Bank assets, assets under management and loans serviced totaled US$31.8 billion at Sept. 30, 2006.

Merrill Lynch expects the transaction to be modestly accretive to its earnings and EPS and neutral to its return on equity by the end of 2008. First Republic’s financial results will be included in Merrill Lynch’s Global Private Client portion of its Global Wealth Management (GWM) segment.