On the heels of merger rumors between Morgan Stanley and money manager BlackRock, Merrill Lynch is now said to be in the final stages of similar discussions with the fixed income specialist.

Merrill would reportedly sell its asset management business to BlackRock for $8 billion, in exchange for a 49% minority stake in the New York money manager. The arrangement would give BlackRock access to Merrill's more than 15,000 brokers, and Merrill access to one of the best-performing fund managers on Wall Street.

The deal would create a fund management giant with $1 trillion in assets and would be indicative of a trend among financial services firms to become specialists, rather than branch out in various areas to become all things to all people, let alone risk regulatory backlash for conflicts of interest.

The acquisition would be the biggest move that Merrill Chairman and CEO E. Stanley O'Neal has taken since becoming president of the firm in 2001. In the years since, he has made his mark primarily by cutting jobs and slashing budgets. If the deal goes through, Merrill's asset management chief Robert Doll is expected to be named vice chairman and have a seat on the board, along with two other Merrill executives, leaving BlackRock ultimately in charge.

The boards of directors at Merrill and BlackRock are expected to meet this week to discuss the possible arrangement, with an announcement possibly today or Wednesday.

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