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Until his telephone rang Saturday morning, Ken Lewis was still trying to figure out how Bank of America, which he ran, could buy Lehman Brothers Holdings Inc. That phone call changed everything.

On the line was John Thain, chief executive officer of Merrill Lynch & Co. Inc. Mr. Thain had spent the previous day discussing the fate of Lehman in New York with regulators and executives from other financial institutions. From those discussions it was clear to him that Lehman would file for bankruptcy protection and that life for independent brokerages like 94-year old Merrill would be difficult.

He asked Mr. Lewis, who had not attended the meetings, whether Bank of America might be interested in buying Merrill. Mr. Lewis didn't hesitate. Within a few hours the men met to work out a deal and Bank of America dispatched a team of 45 lawyers and accountants to pore over Merrill's books.

By Sunday night an offer was in place. Bank of America would acquire Merrill in an all-stock bid worth $29 (U.S.) a share, or roughly $50-billion in total. That was better than Merrill's close Friday on the New York Stock Exchange, at $17.05, but it was a far cry from the firm's high of $97.53 in January of 2007.

In less than 48 hours, Mr. Lewis had transformed Bank of America from a big retail bank in the United States into a global financial powerhouse. If the bid succeeds, Bank of America will have nearly 270,000 employees, operations in 40 countries and operate the world's largest brokerage firm with more than 20,000 advisers managing $2.5-trillion worth of client assets. It will also own just under 50 per cent of asset manager BlackRock Inc.

"We thought this was the strategic opportunity of a lifetime," Mr. Lewis told reporters yesterday. "It's just a major grand slam home run."

In an earlier conference call with analysts he said this deal had done in two days what would have taken 10 years to build. He also insisted that there had been no pressure from regulators.

For Mr. Lewis, a 61-year-old career banker known for his plain-speaking management style, the proposed takeover caps a remarkable run as Bank of America's chief executive officer. Since becoming CEO in 2001, he has made more than $150-billion in acquisitions from the bank's head office in Charlotte, N.C.

Among the acquisitions were FleetBoston Financial Corp. in 2004, credit card giant MBNA Corp. in 2005, LaSalle Bank in 2007 and troubled mortgage lender Countrywide Financial Corp. earlier this year. Even before the Merrill offer, Bank of America had become the second-largest bank in the U.S. with roughly 59 million customers, 6,100 branches and 18,500 bank machines.

But yesterday many analysts questioned whether Mr. Lewis was too eager to buy Merrill. After all, they asked, why not wait until Monday to make an offer since everyone expected the markets to drop after the announcement of Lehman's bankruptcy filing? Mr. Lewis rebuffed those suggestions, saying he didn't want to wait for someone else to jump in.

"We could have rolled the dice and possibly could have got it at a cheaper price," he told analysts. "We thought the long-term benefits were so overwhelming, it was such a strategic opportunity that we elected not to roll the dice and to go ahead and do it at this time."

Other analysts wondered whether Mr. Lewis can successfully integrate Merrill, given the turmoil in financial markets. Yesterday, Standard & Poor's cut the bank's long-term credit rating over just those concerns and Bank of America's share price tumbled 21 per cent.

Mr. Lewis has also expressed a lack of interest in the past about developing the bank's investment business. "I've had all of the fun I can stand in investment banking at the moment," he said in October of 2007 after a round of trading losses at the bank.

When asked about that comment yesterday, Mr. Lewis said he had been frustrated by the limited scope of the bank's investment banking business. It was a "very difficult task staying so narrowly focused," he told reporters. Buying Merrill allows the bank "to be a world-class investment bank and not have to build these things out slowly, not have to worry about being able to get and attract and retain world-class people. So it just solves a lot of issues."

He also insisted he is up to the job of integrating Merrill into the bank, promising to cut expenses by $7-billion, which will likely mean thousands of layoffs. "I think it's very manageable," he said when asked about integrating Merrill and Countrywide at the same time. "We will do it in a very process-driven way. That is a core competency. We know how to manage transitions."

Bank of America (BAC)

Close: $26.55 U.S., down $7.19

MERRILL LYNCH (MER)

Close: $17.06, up 1¢

*****

From corner bank to global giant

Bank of America/Merrill Lynch combined first half '08 revenue mix

Global consumer and small business: 48%

Global corporate and investment banking: 32%

Global wealth management: 20%

SOURCES: BLOOMBERG, THE COMPANIES