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From MarketWatch:
Bank of America Corp. is in advanced talks to buy Countrywide Financial Corp. The Wall Street Journal reported Thursday on its Web site, citing people familiar with the situation. The newspaper said it is not clear how quickly a deal might be struck but if it happens, it is likely to close very soon. However, it also noted that talks could fall apart altogether. Shares of Countrywide Financial surged 7.42% to $5.50 a share.
Stay tuned…
Update 1:15 PM PST:
From MarketWatch:
Bank of America is in advanced talks to acquire Countrywide Financial, possibly stepping in to save the struggling mortgage lender, the Wall Street Journal reported on Thursday, citing unidentified people familiar with the matter.
It isn’t clear how quickly a deal might be struck, but two people familiar with the matter said it could occur very soon, the newspaper said. It’s also possible that an agreement could be delayed or fall apart altogether, it added.
The New York Stock Exchange asked Countrywide to comment publicly on Thursday, but the company declined.
Wowza. Talk about the Python swallowing the Pig.
My concern..is this a good idea for BofA?
Wall Street may think so, based on the closing of the Dow but I wonder if they are biting off more than they can chew?
CW keeps reporting that their foreclosures are up as well as delinquencies..it make me wonder if that orginal write down($1.2 Billion) was just a smoke screen..and there is much more being hidden that BofA may find out upon aquisition.
If I were BofA..I would hold out a little bit more..wait for more finanical reports to make there way to the surface or even consider waiting for CW to go bankrupt and they buy off the cream at a discount..They already threw away $2 Bill…
ann - great point - you should read this article from pj at housing wire the irony is splendid:
http://www.housingwire.com/2008/01/10/bank-of-america-looking-to-buy-countrywide-ah-the-irony/
I think this would be a very high risk and high reward type of deal for Bank of America. CFC’s business is terrible and their portfolio is the worst, so it wouldn’t be for the faint of heart, but if they could keep it afloat it could payoff in the future. I wrote about this story at my blog as well.
http://www.growyourfunds.com/2008/01/bank_of_america_to_buy_country_1.html
If the deal does go through, this would not be good news for cwide employees. Why keep retail mortgage banking centers open when those folks could just join existing BOA mortgage loan centers?
Managers, processors, underwriters and all the line workers who slaved day in and day out to get deals through are going to lose their jobs. They’ll keep the high producing LOs with Realtor and builder connections but offer them a lower rate of pay/commission split.
Then, if the stock goes to zero, think about all those employees who invested their money into purchasing company stock. Now look back at all the stock Angelo has been selling.
I wonder what kind of community protest rallys we would see if the fed bailed them out.
Maybe we don’t have a federal government. Maybe business just tells government what to do in cases like this, because big business OWNS government.
Thanks for the tip Morgan…
An interesting article..stressing some very good points..if I was a BofA shareholder, I would not be please by this news..
If this merger does happen it will be interesting to see the ins and out of the actual purchase…what will actually transfer to BofA and what won’t..
This little Discourse Sums it up nicely:
http://blogs.marketwatch.com/greenberg/2008/01/the-real-story-on-countrywide/
Herb is a sell-sider for those of you keeping track at home. But really, it’s the comments part the really starts to rip open this “debacle” in the making.
People, count yer chickens and run for the hills. THIS AIN’T good news, no way, no how.
More on the story…
http://www.nytimes.com/2008/01/11/business/11bank.html?_r=1&oref=slogin
The grey lady wants so bad for it to be done already.. we’ll see if they in fact do announce?