Merrill Lynch plans to sell its real estate, home relocation and home mortgage businesses and expects to receive at least $500 million for the operations, William A. Schreyer, the company’s chairman and chief executive, announced Monday.
Schreyer, acknowledging that the giant New York-based financial services firm cannot hope to “be all things to all people,” said the proceeds from the sale would be reinvested in Merrill Lynch’s “core businesses, such as global merchant banking, trading, securities underwriting (and) consumer markets activities.”
Company officials said there are a number of prospective buyers for the three operations, but they declined to identify them. There have been no formal discussions with any potential buyers, Schreyer said, adding that the company hopes to complete the sale by the end of the year. Merrill Lynch expects to sell the operations as a package, according to John L. Steffens, executive vice president.
The company plans to retain a unit that offers a revolving line of credit to consumers based on their equity in their homes.
Merrill Lynch has been in the real estate business since 1978 and owns the nation’s third-largest chain of real estate offices, behind the Century 21 franchise operation and Coldwell Banker, a division of Sears, Roebuck.
Merrill Lynch Realty, which has 400 offices in 20 states, is heavily concentrated in California, Texas and Florida, officials said. Last year, its 14,000 sales representatives sold more than 100,000 homes.
The real estate, relocation and mortgage units, which generated revenue of $525 million last year out of Merrill Lynch’s total revenue of $7.1 billion, have been profitable, and the company expects to reap a substantial gain on the sale, Schreyer said.
The relocation business helps corporate clients relocate their employees, while the mortgage unit provides mortgage banking services for single-family homes.
Calling the move an “important strategic decision” for Merrill Lynch, Schreyer said the sale was approved at a board meeting in London about a week ago. The announcement was made in Washington instead of at company headquarters, a official said, because the investment firm’s top executives were here for the annual meetings of the International Monetary Fund and World Bank.