NEW YORK -- Merrill Lynch & Co. Inc. will buy back as much as $6 billion of its stock, the company's biggest share repurchase, after a third straight year of record profit left it flush with cash.
The buyback, announced yesterday, would include about 8.4 percent of outstanding shares based on yesterday's closing price.
Merrill, the world's biggest securities company by market value, joins Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Bear Stearns Cos. in using buybacks to boost returns to shareholders. Yesterday's announcement brings Merrill's total authorization to $14 billion since February 2004.
"This reflects the enormous cash resources that companies, not just the brokerages, have and, to some degree, the lack of investment that they've made," said Howard J. Silverblatt, a Standard & Poor's market analyst in New York. "The brokerage houses have done very, very well."
Merrill had $507.2 billion in cash and marketable securities as of Sept. 30, up from $457.3 billion a year earlier.
Merrill's 2005 net income was a record $5.22 billion on revenue of $26 billion. The company's return on equity, a measure of how effectively it reinvests earnings, was 18 percent last quarter, the highest in five years.
Shares of Merrill, which had gained 13 percent this year through Friday, rose $1.12, or 1.4 percent, to close at $77.88 yesterday on the New York Stock Exchange.
Companies in the Standard & Poor's 500 Index bought back a record $315 billion of stock last year, S&P;'s Silverblatt said. They will probably repurchase at least that much this year, he said.