Merrill, Wachovia, National City Replaced in S&P 500

By Eric Martin

Dec. 23 (Bloomberg) -- Merrill Lynch & Co., Wachovia Corp. and National City Corp. will be dropped from the Standard & Poor’s 500 Index after the credit contraction wiped out more than three quarters of their value, forcing them into takeovers.

The companies will be replaced by Scana Corp., South Carolina’s largest utility owner, Owens-Illinois Inc., the world’s largest maker of glass containers, and FLIR Systems Inc., the maker of night-vision cameras used by U.S. troops, S&P said in a statement posted on its Web site. The change in the benchmark index for U.S. stocks will occur after the close of trading on Dec. 31, S&P said.

New York-based Merrill, the world’s largest securities brokerage, agreed to sell itself to Bank of America Corp. in September for $50 billion after a crisis of confidence sent the stock plunging 36 percent in a single week. Wells Fargo & Co. outbid Citigroup Inc. in October to buy Wachovia, the sixth- largest U.S. lender, which lost or wrote down $96.5 billion from loans to the riskiest borrowers, more than any other firm.

PNC Financial Services Group Inc. agreed to buy National City in October and to sell the U.S. Treasury $7.7 billion in preferred shares and $1.1 billion in warrants. National City, ranked among the top 10 subprime lenders in 2006, has lost more than $3 billion in the past five quarters.

The additions of Scana, Owens-Illinois and FLIR Systems may support their stock prices as money managers tracking the S&P 500 buy shares. In after hours trading Owens-Illinois climbed 6.1 percent to $23.60, FLIR Systems rose 3.3 percent to $27.66 and Scana was unchanged at $33.98 at 6:05 p.m. New York time.

Merrill fell 80 percent to $10.88 in 2008, while Wachovia dropped 86 percent to $5.30 and National City lost 90 percent to $1.65.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.