September 22, 2008 / 5:53 PM / 11 years ago

UPDATE 1-Sandler O'Neill cuts Merrill Lynch rating to hold

(Adds details)

Sept 22 (Reuters) - Sandler O’Neill Partners downgraded Merrill Lynch & Co Inc MER.N to “hold” from “buy,” citing a recent rise in Merrill’s share price.

“Since our upgrade, Merrill Lynch shares have risen by 73 percent, and the spread between Merrill’s share price and the exchange rate implied takeover price has narrowed to what we believe to be a more reasonable 8 percent,” analyst Jeff Harte wrote in a note to clients.

The brokerage had upgraded Merrill shares a day after the investment bank agreed to a shot-gun wedding with Bank of America Corp (BAC.N), which agreed to pay 0.8595 shares of its common stock for each Merrill Lynch share.

Harte, who raised his price target on Merrill stock to $30 from $23, said the final takeover price, and accordingly the price target, will fluctuate with Bank of America’s share price given the fixed exchange rate.

Merrill shares were trading down more than 5 percent at $27.95 and Bank of America shares were trading down 7 percent at $34.87 in afternoon trade on the New York Stock Exchange. (Reporting by Ratul Ray Chaudhuri in Bangalore; Editing by Anil D’Silva)

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