Merrill Lynch Plans to Sell Energy Arm to ABN Amro
March 7, 2000 12:14 am ET
NEW YORK -- Merrill Lynch & Co. continued its march out of the commodity business Monday, selling its energy-derivatives arm to ABN Amro Inc. for an undisclosed price.
Merrill had simply eliminated most of its commodity business in January, keeping only the energy and financial brokerage operations, which it said were the only profitable aspects of its futures and options business.
Merrill said in a statement Monday it will continue to serve corporate clients who wanted to trade energy "over the counter," in deals away from public exchange floors. But the brokerage firm's continued exit from the derivatives business highlights how unattractive the area has become even for some large firms in a booming energy market with crude-oil prices more than $30 a barrel.
The deal will roughly double the size of ABN Amro's futures business. The firm approached Merrill about its energy unit in January, soon after Merrill ditched its metals and agricultural-commodity business.
"That part of it was a real good fit for us," said Jim Gary, head of ABN Amro's futures trading, who began serious discussions about a month after that initial approach. Mr. Gary estimated Merrill's energy futures desk has about 60 employees, although ABN Amro plans to cut the size of the staff.