Ken Lewis from Bank of America is Gone! Noooo!!
A reader writes in: “FS, not sure if you heard the news, but Ken Lewis is stepping down as CEO of Bank of America by year end! My colleagues and I work for a boutique bank, and were all hoping Ken would go on an acquisition binge again and take us out at a huge premium just like he did with Merrill Lynch. What are we going to do? A couple of us have already made plans to buy nice presents for our wives this Christmas on hopes that big Ken would show us the money! Who do you think will be the new Ken to take us out? Thanks, Jeff”
Slicing Response: Hey Jeff, we heard! We consider Ken Lewis to be one of America’s greatest Empire Builders of this century. After swallowing Countrywide Financial, Ken’s decision to pay $50 billion for Merrill Lynch BEFORE the market opened when futures showed a 5% decline, rather than AFTER the market close was amazing! What’s overpaying by at least $25 billion more among shareholders? Ken was a great hero to thousands of Merrill employees for bailing them out. Ken was also seen as the savior for many others in the industry who knew that so long as there was someone out there paying huge premiums, there was a chance at striking it rich.
It’s clear Ken’s desire to conquer the world got him in a little bit of trouble. John Thain, ex-CEO of Merrill Lynch was a genius in orchestrating his firm’s sale right before disclosing billions in losses a couple months later. Too bad he had to spend $1 million decorating his office during the worst downturn of our lifetimes! $50,000 toilet anybody? Several poker buddies from Merrill did very well thanks to Ken & John, so we know where you are coming from.
Don’t fret! The first place to look for the new Ken is probably at large commercial banks. John Stumpf, CEO of Wells Fargo could be a potential suitor. He spent $13 billion for Wachovia Bank, and might want to continue expanding. The problem with John is that he seems like a pretty rational guy, so it may be hard to get him to pay a massive premium, whatever your fair value is.
We don’t think you have to worry about not having enough suitors if you have a decent business, and strong brand name in your niche. There will always be plenty of folks who want to rule the world. You just have to play to their egos! We wish Ken the best. Maybe he’ll turn up at the other Bank of America, Citigroup. :) Go USA!
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PS: Jeff, so thoughtful of you to go shopping for your wife so soon! Making us look bad man. Thank goodness it’s now October, and we can spend like crazy again. Just kidding.