Merrill

NEW YORK (AP) -- Investment bank Merrill Lynch & Co. said Monday it sold a stake in itself to Temasek Holdings and Davis Selected Advisors for $6.2 billion as it looks to strengthen its balance sheet.

Temasek, an investment fund for the government of Singapore, will acquire $4.4 billion in Merrill Lynch common stock. Temasek has the option to purchase an additional $600 million of common stock by March 28. The investment is for no more than 10 percent of common stock.

Davis Selected Advisors will receive common stock from an $1.2 billion investment as well. Both investors will remain passive. The sales are expected to close by the middle of January.

Like other investment banks, Merrill Lynch has reached out to a foreign investment fund for a new source of capital as it is plagued by the weakening credit markets. Merrill Lynch took a nearly $8 billion writedown on the value of bonds and debt backed by mortgages in the third quarter and is expected to take billions of dollars in additional writedowns in the fourth quarter. Shares of Merrill Lynch rose $2.80, or 5 percent, to $58.34 in morning trading.