By Lisa Kerner
Charlotte, N.C., Jan. 11 - Bank of America Corp. agreed to acquire Countrywide Financial Corp. in an all-stock transaction valued at some $4 billion.
The companies' merger agreement calls for Countrywide shareholders to receive 0.1822 of a share of Bank of America stock in exchange for each share of Countrywide.
With the acquisition, Bank of America will become the United States' largest mortgage lender and loan servicer, benefiting from Countrywide's extensive retail, wholesale and correspondent distribution networks, according to a Bank of America news release.
Both companies' boards of directions have approved the transaction, which is slated to close in the third quarter of 2008.
Countrywide will continue to operate separately under the Countrywide brand with integration occurring no sooner than 2009. Origination of subprime loans is not planned for the combined company.
Bank of America and Countrywide both support efforts to fight predatory lending practices, the release stated. As a result, Bank of America will expand marketing of credit counseling and related programs once the acquisition is complete.
The deal is expected to be neutral to Bank of America's earnings per share in 2008 and accretive in 2009, excluding merger and restructuring costs. Total after-tax cost savings are expected to reach $670 million through 2011.
"Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation's premier lender to consumers," Bank of America chairman and chief executive officer Kenneth D. Lewis said in the release.
"Home ownership is a fundamental pillar of the U.S. economy and over time it will be a key area of growth for Bank of America," Lewis added.
"We have had a long and positive relationship with Bank of America and our servicing and origination businesses, as well as other aspects of our operations, will be substantially enhanced as a result of this transaction," Countrywide chairman and CEO Angelo R. Mozilo stated in the release.
Bank of America was advised by Banc of America Securities, and Countrywide was advised by Sandler O'Neill & Partners LP and the Goldman Sachs Group, Inc.
Countrywide is a diversified financial services provider based in Calabasas, Calif.
Bank of America, based in Charlotte, N.C., is a holding company that provides banking and financial services.
| Acquirer: | Bank of America Corp.
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| Target: | Countrywide Financial Corp.
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| Announcement date: | Jan. 11
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| Transaction total: | $4 billion
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| Price per share: | 0.1822 of a Bank of America share
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| Expected closing: | Third quarter of 2008
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| Stock price for acquirer: | NYSE: BAC: $39.30 on Jan. 10
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| Stock price of target: | NYSE: CFC: $7.75 on Jan. 10
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