MERRILL TO GET 30 MLN DLR FEE IN BORG &lt;BOR> DEAL
  Merrill Lynch and Co Inc &lt;MER>
  subsidiary seeking to take over of Borg-Warner Corp said it
  could realize a 30 mln dlr fee for its efforts, whether or not
  the deal, which it values at 4.7 billion dlrs, succeeds.
      In a filing with the Securities and Exchange Commission,
  Merrill Lynch Capital Partners Inc said it would receive a 30
  mln dlr fee from the surviving company for acting as dealer
  manager of the merger after the Borg-Warner deal is completed.
      But it said it could also receive a break-up fee of 30 mln
  dlrs if the deal fails for reasons, which include another party
  holding more than 40 pct of its stock or tendering for 50 pct.
      The 30 mln dlr fee is among the highest set down in any
  tender offer agreement, either in compensation for dealer
  manager services or for break-up of the deal.
      Merrill Lynch Capital Markets, backed by a group of
  investors it organized, has launched a 48.50 dlr a share tender
  offer for Borg-Warner for 90 pct of its stock.
      The company's board has approved the plan, which was
  intended to thwart an unsolicited offer from GAF Corp.
      Borg-Warner also agreed to redeem all outstanding Series A
  preferred shares and to pay off on all options at a 48.50 dlr a
  share exercise price before the merger is effective, it said.
      Merrill Lynch said its representatives discussed a possible
  leveraged buyout with Borg-Warner as early as last December.
      At that time, Merrill Lynch told the company it would
  consider a 43 dlr a share tender offer in cash and securities,
  if the Borg-Warner board approved, it said. On Feb 24, it said
  it was told the company had decided against a buyout.
      But talks were revived after GAF launched its 46 dlr a
  share proposal on March 31, Merrill Lynch said.
      Unlike its earlier proposal, Merrill Lynch said Borg-Warner
  management was asked not to take part in the new deal and it
  was conditioned upon payment of the fees.
      In addition to its fees, Merrill Lynch said it will also
  get up to 17 mln dlrs from Borg-Warner to cover its expenses in
  the tender offer.
      Merrill Lynch said it would continue operating Borg-Warner
  as a subsidiary with its current officers keeping their
  positions.
      But for flexibility purposes, Merrill Lynch said it is
  considering redistributing Borg-Warner's assets to a number of
  subsdiaries of an entity it created to carry out the merger.
      All in all Merrill Lynch estimated that there would be 130
  mln dlrs in fees and expenses connected with the deal.
      Another 250 mln dlrs will be needed to repay certain debt
  of Borg-Warner, Merrill Lynch said.
      To finance the deal, Merrill Lynch said it expects to
  borrow 3.5 billion dlrs from a group of banks and sell 100 mln
  dlrs of common stock of the new company, sell 100 mln dlrs of
  non-voting preferred stock of the new company to Merrill Lynch
  and Co, sell up to 650 mln dlrs of subordinated notes to
  Merrill Lynch and Co and sell to the public 204 mln dlrs of
  subordinated discount debentures.
      GAF has raised its offer to 48 dlrs a share cash.
  

