The deal comes within hours of BoA’s decision not to rescue stricken US bank Lehman Brothers, which has filed for bankruptcy, as reported today by WealthBriefing.

In a statement, BoA said it will swap 0.8595 shares of its stock for each Merrill Lynch common share. The price is 1.8 times stated tangible book value.

The deal ends Merrill’s independence as a firm that stretches back 94 years. Merrill has lost more than $45 billion due to massive write-downs on bad mortgages amid the US credit crisis. The transaction is expected to close in the first quarter of 2009, BoA said. The transaction has been approved by directors of both companies and is subject to shareholder votes at both companies and standard regulatory approvals.

Merrill Lynch owns a substantial wealth management business and has recently been expanding the reach of this operation into emerging markets such as Asia.

"Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders,” Bank of America chairman and chief executive Ken Lewis said.

According to the New York Times, Merrill’s brokers would be combined with Bank of America’s smaller group of wealth advisors into an entity called Merrill Lynch Wealth Management. As a result of the deal, BoA acquires Merrill's headcount of more than 16,000 financial advisors, creating a brokerage giant with more than 20,000 advisors and $2.5 trillion in client assets, the firm said.

WealthBriefing contacted Merrill Lynch about the implications of the deal but the firm did not immediately return calls.

The investment firm, famous for its bull logo, is the second bargain acquired by BoA as a result of the collapse of US mortgage markets. It paid $2.5 billion in stock for Countrywide Financial, making the Charlotte, North Carolina-based bank the nation's biggest home lender.

Merrill also owns about half of BlackRock, the New York-based asset management company that had a market value of $24 billion as of 12 September.

Mr Lewis and Merrill Lynch chief executive John Thain will host a conference call for investors at 8 am, Eastern Daily Time.