Challenger in talks with Merrill Lynch

Challenger Internationalhas confirmed media speculation this morning that it had indeed been in talks withMerrill Lynchabout acquiring its private client division.

In a statement to theAustralian Stock Exchange, Challenger company secretary David Slayter confirmed the financial services group had been in a number of discussions with key players in the financial services market concerning distribution alliances.

“These discussions have included negotiations with Merrill Lynch on a distribution alliance involving its private client division,” he says.

The speculation on the acquisition focused on Kerry Packer’s indirect involvement in the talks through his son James Packer and Packer vehicle CPH Investment Corp investment manager Ashok Jacob, both of whom have seats on the Challenger board.

The media reports also say it would cost the funds manager $40 million to acquire the Merrill Lynch client division, which would provide Challenger with a reach into retail broking. The reports also claim many of the Merrill’s 100 private client advisers and support staff are apprehensive of joining Challenger, and are reportedly in talks with UBS Warburg and Salomon Smith Barney.

Slayter, however, responded to such speculation defensively and says Challenger was not aware of the basis or source for the reports.