Merrill to sell Bloomberg stake for $4.5bln: source

By Megan Davies and Dan Wilchins

NEW YORK (Reuters) - Merrill Lynch & Co Inc MER.N has agreed to sell its 20 percent stake in Bloomberg LP back to the news and financial data company for about $4.5 billion, a source familiar with the situation said on Wednesday.

The Wall Street investment bank and brokerage has also decided to retain its 49.8 percent stake in money manager BlackRock Inc (BLK.N), the source said.

Merrill is expected to announce the sale of the Bloomberg stake on Thursday when it also announces second-quarter results, the source said.

Merrill spokeswoman Jessica Oppenheim and BlackRock spokesman Brian Beades declined to comment. Bloomberg did not immediately return a phone call and e-mail seeking comment.

Selling the Bloomberg or BlackRock stakes could help Merrill Chief Executive John Thain raise capital to make up for write-downs related in part to subprime mortgages.

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 may take write-downs totaling as much as $6 billion, analysts have said, on top of 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.