Friday, January 11, 2008

BAC Takes The Bait in 2008

by Tanta on 1/11/2008 07:58:00 AM

LONDON (MarketWatch) -- Bank of America said on Friday it's buying Countrywide Financial for $4 billion, confirming rumors that first emerged Thursday, in a move that will make it the top mortgage lender and loan servicer in the U.S. . . .

Terms of the deal call for shareholders of Countrywide to receive 0.1822 of a share of Bank of America stock in exchange for each share they own.

At Thursday's close, that values Countrywide at $7.16 per share -- lower than the $7.75 closing price after news leaked of a possible deal.

Countrywide shares fell 15%, or $1.22 in pre-open trading Friday, to $6.53.

The purchase is expected to close in the third quarter. It's expected to be neutral to Bank of America earnings per share in 2008 and lift EPS in 2009, excluding merger and restructuring costs.

Bank of America expects $670 million in after-tax cost savings in the transaction, fully realized by 2011.