Mumbai: Merrill Lynch & Co, hit by huge write-downs following the subprime mortgage market melt-down, is planning to sell its 20 per cent stake in financial news and data provider Bloomberg LP to a trust controlled by New York City Mayor Michael Bloomberg, reports quoting Wall Street sources said.

Reports also said the terms of the sale and the valuation of the stocks remained vague and nothing was final. Analysts have valued Merrill's stake at between $5 billion and $10 billion, reports said.

Merrill's 20 per cent stake comes from the seed money it had provided Blomberg in 1981 to launch business.

Michael Bloomberg, who became New York's mayor in January 2002, retains a majority stake in privately-held Bloomberg LP, but has given up day-to-day control.

Cash-strapped Merrill is planning to raise around $50 billion through sale of various assets and the Bloomberg stake sale is part of that, sources said, warning a deal could still fall apart.

Merrill also is looking at ways to sell its 49 per cent stake in investment banking firm BlackRock, the report said. Merrill's stake in BlackRock is worth an estimated $13 billion.

Merrill has already raised more than $10 billion in new capital to make up for mortgage-related write-downs. However, the stock market has since fallen, damaging stock values further.

Merrill, which is facing restrictions in raising fresh capital, has now turned to stake sales to raise more capital. Analysts expect Merril to issue more preferential stock than common stock, considering the huge payout to those investors who purchased more than $12 billion in Merrill common and preferred shares earlier this year.

A revaluation of Merrill's 20 per cent stake in Bloomberg could alter the valuation of Merrill itself. That would also give a clear picture of the assets of New York City Mayor Mike Bloomberg.

As per revised accounting standards announced by the Financial Accounting Standards Board - the SFAS No 157 – banks should record a gain if the market value of an asset is greater than its book value.

Merrill Lynch will revalue the 20 per cent stake in Bloomberg when it reports first-quarter earnings next month. For Merrill, that could mean a huge gain. The bank first bought 30 per cent of Bloomberg back in the mid-1980s. In 1996, it sold 10 per cent of the firm back to Bloomberg for $200 million, valuing the company, Bloomberg LP, at $2 billion and Merrill's investment at $400 million.

Since then, Bloomberg's business has exploded. Its 250,000 terminals, costing $18,000 a year, are believed to bring in about $4.5 billion in sales. Blomberg, whose profit margins are expected to be above the 25 times reported by rival Thomson Reuters, would value its business at about $18 billion - and Merrill's stake should bring in a minimum $3.6 billion.

With about $90 billion in liquidity, Merrill, however, is in no huge rush to raise money right now, at least when compared to Lehman Brothers or the even smaller and now defunct Bear Stearns Cos.

A buyer of the Bloomberg stake would, however, need to get approval from Bloomberg himself, and would need to come with a major strategic value.