Chase Manhattan Corp. and Merrill Lynch & Co. plan to bring a $900 million loan to market over the next few weeks backing Thomas H. Lee Co.'s $1.06 billion leveraged buyout of Fisher Scientific International.

The credit, which Chase and Merrill are equally underwriting, is expected to include a tranche of at least $300 million for institutional investors. The piece is expected to be snapped up by these investors, who are growing increasingly hungry for larger allocations in their bank loan portfolios.

Thomas H. Lee, a Boston-based buyout firm, said Thursday it planned to buy Fisher Scientific, a Hampton, N.H., maker of scientific equipment. Fisher accepted Lee's offer as an alternative to a hostile bid from The Bass Group, a Fort Worth buyout firm that owns about 10% of the company.

For banks, the deal is noteworthy as opportunities to finance leveraged buyouts for large public companies like Fisher are few and far between. Most LBOs today are for small, private firms.

Indeed, the sheer size of the Fisher deal enabled Chase and Merrill to play a variety of roles. Chase Securities Inc. and Merrill, for instance, are set to co-manage a $350 million high-yield bond issue for the acquisition.

The two firms also acted as financial advisers to Thomas H. Lee. Chase Capital Partners is investing in the deal, along with Thomas H. Lee and Donaldson, Lufkin & Jenrette's DLJ Merchant Banking Partners. Merrill is also expected to invest equity in the deal.

While Chase and Merrill have worked together on a slew of bond issues, observers said the loan for Thomas H. Lee marks the first time that Chase- the largest lender to LBO firms-has split the lead position on a major loan with a Wall Street firm.

Merrill's loan shop, which is staffed with several former employees of Chemical Banking Corp., entered the top 10 list of lenders to sponsor firms in the first half of this year, according to data from Gold Sheets/Loan Pricing Corp.

"It's understandable that large global securities firms and commercial banking firms are opening their doors to each other where there is a mutuality of interest and relationship, while they are formidable competitors across a broad spectrum of products," said James McDermott, president of research at Keefe, Bruyette & Woods Inc., New York.

Both Chase and Merrill have existing relationships with Thomas H. Lee. Chase recently led a $1 billion financing package backing the firm's investment in TRW Inc., a Cleveland-based auto parts maker. It also led a $2 billion financing for Lee's investment in Jacksonville, Fla.-based Homeside Lending Inc.

Thomas H. Lee Co., which manages about $3 billion of committed capital, has acquired substantial ownership positions in Experian Information Systems, Rayovac, Safelite Glass, and Syratech.

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