Bank of America said it will purchase the iconic brokerage house Merrill Lynch for $29 per share in an all-stock transaction.

The report comes on the heels of Bank of America (BAC) walking away from a purchase of now basically dead Lehman Brothers (LEH) this weekend.

Bank of America said it would pay $50 billion, or $29 a share, for Merrill Lynch (MER). Both company's board of directors approved the deal. However, the merger is still subject to shareholder and regulatory approval.

"Merrill Lynch is a great global franchise and I look forward to working with (BofA Chief Executive) Ken Lewis and our senior managment teams to create what will be the leading financial institution in the world with the combination of these two firms," said Merrill Lynch CEO John Thain in a statement. 

As part of the transaction, each Merrill Lynch share will be exchanged for 0.8595 shares of Bank of America stock. The deal is expected to close in the first quarter of 2009.

This purchase by Bank of America, which for the most part survived the subprime mortgage, marks the second major acquisition by Chief Executive Kenneth Lewis in the past year. The bank bought then then-distressed mortgage lender Countrywide Financial for around $7 a share. 

In adding Merrill Lynch, Bank of America now has acquired nation's largest brokerage house as well as a well-regarded investment bank.

Both companies were unavailable for comment on the report. A statement between the companies is expected before the market opens tomorrow at 9:30 a.m. New York time.

While Merrill's shares are down more than 50% from a year ago, the deal between Bank of America and Merrill Lynch came after Merrill's shares fell by more than 35% last week after Wall Street became increasingly concerned the brokerage house could become the next bank to fail.

Over the weekend, Bank of America and British bank Barclays emerged as likely suitors to purchase Lehman Brothers--however, both banks walked away from the table after government regulators refused to provide the financial backstop they provided to JPMorgan Chase (JPM) when it purchased Bear Stearns back in mid-March. Click here to read more about that story.

Merrill Lynch is probably the most well-known name on Wall Street to middle-class retail investors. Its nationwide brokerage arm reaches into small and large-size towns across all 50 states. 

The fate of Merrill Lynch's 60,000 employees was not known as of Sunday night. The best comparison Wall Street has to BofA's purchase of Merrill is JPMorgan's purchase of Bear Stearns. In that case, more than half of Bear Stearns' employees lost their jobs.