American Beacon Advisors Inc., a Fort Worth asset management unit of Lighthouse Holdings Inc., said E. Stanley O'Neal, the former chairman, president and chief executive of Merrill Lynch & Co., has joined its board of directors.
Lighthouse is owned by investment funds controlled by two private-equity firms: Pharos Capital Group LLC of Dallas and TPG Capital LP of San Francisco.
O'Neal retired from Merrill in October 2007, after it reported a third-quarter net loss of $2.24 billion and underestimated mortgage-related writedowns for the period. He reportedly called a top Wachovia Corp. executive, without the approval of Merrill's board, to suggest the companies discuss a merger, leading to his resignation.
William F. Quinn, American Beacon's executive chairman, said in an interview Tuesday that it picked O'Neal, despite those reports, because enough time had passed and his experience outweighed any negativity. "I have known Stan for a long time, and I think he is an outstanding individual with great experience," Quinn said. "As we explore opportunities in the marketplace, we think he can provide some valuable insight."
Analysts said they doubt there is any lingering negativity toward O'Neal, and that enough time has passed for him to get back into asset management. "It is clear that Lighthouse wants to grow an asset management business and plans to use American Beacon and a prominent executive in O'Neal to help do that," said Geoffrey Bobroff, an analyst with Bobroff Consulting Inc. in East Greenwich, R.I.
American Beacon had $36.6 billion of assets under management as of March 31. Lighthouse bought it in September from AMR Corp., the parent company of American Airlines Inc., for about $480 million in cash. Merrill acted as the exclusive financial adviser to Pharos and TPG on the deal.
After the acquisition, American Beacon planned to add one to three independent directors with experience in financial services, Quinn said. "I think Stan's experience at Merrill will really help us."
American Beacon plans to expand organically and possibly by acquisition, he said. Since September, it has doubled its sales force and added some products.
O'Neal, who worked at Merrill from 1987 to 2007, is also a director of Alcoa Inc. and the Memorial Sloan-Kettering Cancer Center.