Bank of America: Countrywide Deal "On Track"
In the wake of an analyst report that sent Countrywide Financial Corp. (CFC) shares on a wild ride Monday afternoon, Bank of America Corp. (BAC) has confirmed that its plan to acquire Countrywide by the end of the third quarter of this year is moving ahead as planned. Bloomberg News reported on comments made by BofA spokesperson Robert Stickler, who said that "the transaction is on track." The Wall Street Journal reported that while Countrywide is focusing in on some of Countrywide's loans -- fraud is a large concern, the Journal said, citing a party familiar with the due diligence process -- it isn't attempting to renegotiate its purchase price. Countrywide had plunged in earlier trading, based off of a report from Friedman, Billings, Ramsey analyst Paul Miller that had suggested that losses in Countrywide's loan portfolio had grown larger than BofA's original expectations when it first penned the deal in January. Miller reduced his target price for shares of the Calabasses-based lender to between $0 and $2 per share, relative to the $7 per share price implied by the current deal. Shares at Countrywide fell as low as $5.00 in active trading Monday -- 16.4 percent off their $5.98 per share closing price on Friday -- before recovering slightly to close off roughly 10 percent at $5.36. Bank of America shares lost 2 percent to close at $38.97 on Monday. Disclosure: The author was long CFC and held no other positions of relevance when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.