Gloves come off for Countrywide; InBev repeats $65 per share bid; Precision Drilling ups Grey Wolf offer

By Aaron Hochman-Zimmerman

New York, June 25 - Lawyers with lawsuits and governors with grudges were ready to pounce as soon as Countrywide Financial Corp.'s shareholders voted to approve the merger with Bank of America Corp.

Now that the deal is a few days from completion the knives came out to cut off a piece of the lender accused of fraudulent lending practices.

In the retail sector, Circuit City Stores Inc. investor Mark Wattles insisted that there is a group of potential buyers aside from Blockbuster Inc.

Elsewhere, Precision Drilling Trust added $0.70 to its last offer for Grey Wolf Inc., which is in the middle of a merger with Basic Energy Services Inc.

Still, Precision Drilling received the same likely rejection.

Carlos Brito of InBev NV repeated his offer of $65 per share to Anheuser-Busch Cos. Inc. as some rumblings held that Anheuser-Busch's chief executive officer August Busch IV may seek up to $75 per share.

Meanwhile, the Dow Jones Industrial Average ended slightly better, adding 4.40, or 0.04%, to finish at 11,811.83, while the Nasdaq Composite Index added 32.98, or 1.39%, to finish at 2,401.26.

The S&P 500 picked up 7.68, or 0.58%, to close at 1,321.97.

Air show

The deal between the unions representing the Delta Air Lines Inc. and Northwest Airlines Corp. pilots did little to change the heading of the eventual merger, said Avondale Partners analyst Bob McAdoo.

"I think the deal was going to happen whether this got done or not," he said "I don't know that this changes the odds at all, it changes the process a little."

Even after a Tuesday meeting between Sen. Harry Reid, D-Nev., and the heads of both companies "I don't see any real opposition to the deal," McAdoo said.

Shares of Delta (NYSE: DAL) improved $0.05, or 0.95%, to close the day at $5.31.

Shares of Northwest (NYSE: NWA) were better by $0.16, or 2.70%, to finish at $6.08.

The smell of Circuit City

Recently Mark Wattles of Wattles Capital Management fame, whose fund owns nearly 6.5% of Circuit City shares, has been flaunting the potential buyers of the electronics retailer.

"The sniffing is over with," Wattles told the Wall Street Journal.

Perhaps manners prevented Wattles from mentioning the names of these potential buyers, but he did predict an announcement within one month.

After the deal with Blockbuster was put on the back shelf, Circuit City has continued to suffer and is anxious to find a willing buyer, a market source said.

Shares of Circuit City (NYSE: CC) tacked on $0.11, or 3.28%, to end at $3.46.

Shares of Blockbuster (NYSE: BBI) inched up $0.03, or 1.15%, to close at $2.56.

Precision hounds Grey Wolf

On the third time Precision Drilling cried wolf, the answer was the same.

Grey Wolf said it will uphold its fiduciary duties and review the $10 per share offer as permitted under its standing merger agreement with Basic Energy Services, Grey Wolf said in a statement.

Precision's previous two attempts were at $9 and $9.30 per share. Both came after Grey Wolf's deal with Basic Energy Services was announced and both were rejected.

Shares of Grey Wolf (AMEX: GW) took on $0.01, or 0.11%, to $9.39.

Shares of Precision Drilling (NYSE: PDS) gave back $0.56, or 2.01%, to $27.30.

Shares of Basic Energy Services (NYSE: BAS) shed $0.21, or 0.68%, to $30.54

Queue to sue Mozillo, Countrywide

With shareholder approval of the deal to save Countrywide, states may start to line up to fire off lawsuits at the lender and its former boss Angelo Mozillo.

Any states planning to file will have to line up behind Illinois and California, which have already announced suits alleging unfair and deceptive lending practices, a market source said.

Now, "states can sue Mozillo to death," an equity analyst said, whereas before the shareholder approval states did not want to interfere and perhaps torpedo the deal.

The analyst expects Bank of America to cut a deal with the states, he said, with support from the Federal Reserve.

In the state of Washington, Democratic governor Chris Gregoire has an idea of what kind of deal she would like from Countrywide.

Gregoire announced that she will seek to revoke Countrywide's license to operate in Washington as well as a proposed fine of $1 million and an additional penalty of $5 million in back assessments, according to a statement from her office.

"We intend to bring the full weight of the state on Countrywide to rewrite home loans for minority borrowers who may have been misled into signing predatory mortgages," the governor said in the statement.

"My job is to protect hard-working Washingtonians, and protect them we will."

Shares of Countrywide (NYSE: CFC) slipped $0.08, or 1.72%, to $4.58.

Shares of Bank of America (NYSE: BAC) was lower by just $0.01, or 0.04%, to $26.61.

The deal is still expected to close July 1.

Third letter to Anheuser-Busch

InBev chief executive officer Carlos Brito repeated his $65 per share offer in his third letter to Anheuser-Busch's board on Wednesday.

The letter retreaded the ground over what value InBev brings to Anheuser-Busch's shareholders and how committed InBev is to the deal.

In the letter, Brito referred to his "firm" offer, to put to rest what a market source described as August Busch IV's wishful thinking of $75 per share.

Brito also noted a team of banks has been retained to finance the deal.

Shares of Anheuser-Busch (NYSE: BUD) added $0.63, or 1.03%, to $61.76.

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