Bloomberg Buying Bloomberg?

Blind trusts are popular with politicians: the idea is that the politician in question can’t have any conflicts of interest with respect to his investments if he doesn’t know what his investments are. As a result, you’re not going to find blind trusts ever making the headlines: if everybody knows what the trust is investing in, then that defeats the purpose.

Yet:

A blind trust run by Mayor Bloomberg is willing to pay between $4.5 billion and $5 billion to buy Merrill Lynch’s 20 percent stake in Bloomberg LP, sources tell The Post.

Bloomberg’s job is mayor of New York, he’s not a fund manager: the blind trust is run on his behalf, it’s not run by him. But since the whole point of a blind trust is that the politician in question can’t tell it what to invest in, what’s going on here? I simply can’t believe that the people actually running the trust would spend $5 billion on buying a 20% stake in Bloomberg LP without Bloomberg himself being involved in the decision.

It makes sense that decisions related to Bloomberg’s ownership stake in Bloomberg LP might be exempt from the other blind trust rules. After all, since Bloomberg already owns 80% of the company, he’s plenty conflicted on that front already.

But it also makes sense that the amount of money Bloomberg’s willing to pay for the 20% of Bloomberg LP he doesn’t already own would be affected by the amount of money he has at his disposal, the ease with which he can liquidate his assets, and the discount to fair value that he’d have to accept if he wanted to raise $5 billion in cash in a hurry. After all, even if you’re a billionaire, coming up with that kind of money is non-trivial.

The numbers being bandied about by the Post would value Bloomberg LP (and, therefore, Bloomberg himself, if he owns all the company and has no debt to speak of) at somewhere between $22.5 billion and $25 billion. Forbes pegged Bloomberg’s wealth at $11.5 billion this year, up from $5.5 billion last year. Next year, is that number going to double again?

(Of course, Bloomberg could, if he wanted, try to borrow the $5 billion, rather than pay in cash. Hey – maybe he could ask Merrill Lynch for a loan!)