Merrill and BlackRock deal?

The big buzz on the street today was the possible acquisition by Merrill Lynch of a minority stake in the asset management firm BlackRock. While there's no official word from either company, the deal is said to be in "advanced talks."

David Weidner at MarketWatch writes:

A deal between Merrill Lynch (MER) and BlackRock (BLK) would create a $1 trillion fund-management colossus and transform the country's biggest retail brokerage firm. Talks have reached advanced stages, and a deal could be reached and announced as early as Tuesday.

"Transform" Merrill Lynch? Probably not. A fifty percent stake in a firm with around 1,000 employees and $450 billion under management is an interesting move on Merrill's part but won't have any significant impact on the $1.6 trillion brokerage firm or its 55,000 employees. It won't "transform" Merrill any more than Morgan Stanley's acquisition of Van Kampen transformed Morgan ten years ago.

There are a couple of big pluses for Merrill though. Ever since the scandals that have rocked the street in recent years, brokerages have looked for ways to separate themselves from the asset management business to reduce any possible conflicts of interest. BlackRock would provide that distance while also contributing some world-class expertise in fixed income management, a talent that is in big demand these days (kind of like internet analysts were in the late 90s) .

It could, however, transform BlackRock. Access to a sales force of over 15,000 financial advisors could be a very good thing. Time will tell.