Friday January 11, 12:24 PM
Bank of America agrees to acquire Countrywide Financial for $4B in stock
NEW YORK (Thomson Financial) - Bank of America Corp. Friday agreed to acquire Countrywide Financial Corp. for roughly $4 billion in stock.
The deal calls for Bank of America to swap .1822 of a share for each share of Countrywide (LSE: CWD.L - news) stock. The transaction values Countrywide shares at roughly $7.16 each, based on Thursday's close. This is roughly a 7.6% discount to the Countrywide's closing price of $7.75 on Thursday.
Bank of America, based in Charlotte, N.C., anticipates the deal will close in the third quarter and be neutral to earnings in 2008 before adding to earnings in 2009. This view excludes merger and restructuring costs.
B of A sees after-tax cost savings of $670 million from the transaction, a figure that represents 11% of the expense base of the company's mortgage operations.
The combined company doesn't plan to originate subprime loans, B of A said.
Michael Baron
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