The final days: BofA may swallow Countrywide by July 1
Countrywide Financial Corp.’s demise as an independent business is near.
A Bank of America Corp. spokesman in Charlotte confirmed today that the company could complete its takeover of the loss-ridden mortgage giant by July 1.
Countrywide shareholders are to meet on Wednesday at the firm’s Calabasas headquarters to vote on the deal. (Not that they have any real choice.)
Once it gets that approval, BofA could complete its stock swap by July 1. That would be the end of Countrywide as run by CEO Angelo Mozilo, who of course has become the personification of the outrageously sleazy lending that fueled the housing market bubble.
It isn’t clear whether July 1 also would be Mozilo’s last official day of work. A call to Countrywide’s media relations line wasn’t returned.
BofA CEO Ken Lewis has said he expected the 69-year-old Mozilo to "stay until the deal gets done, and I would assume he would then want to go have some fun." Maybe taking a computer-learning class?
Given the lightning rod that Mozilo has become, BofA probably wishes he would have departed months ago. But until it gets the stock, the bank can’t officially boot him.
As for Countrywide shareholders, including Mozilo, their payoff in the takeover was never much, relatively speaking -- and it’s getting smaller by the day, as BofA’s stock sinks with the latest blistering sell-off in financial shares in general.
Under terms of the deal, announced in January, BofA will exchange 0.1822 of its shares for each Countrywide share. When the takeover was announced on Jan. 11, BofA shares were at $38.50. That put a value of $7.01 a share on Countrywide.
Today, BofA’s stock fell 23 cents to $28.14, its lowest since 2001. That values Country- wide at $5.13 a share -- 89% below its record high of $45 in February 2007.
Even as the takeover nears completion, Wall Street has continued to price Countrywide stock below the theoretical deal value. The shares ended at $4.83 today on the NYSE. Still, the discount was far wider a few weeks ago when worries kept surfacing that BofA might pull out.
Right now, it looks like a new master is about to take control in Calabasas.
Photo: Countrywide CEO Angelo Mozilo. Ric Francis/Associated Press
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Run, do not walk away from this toxic transaction. Ken Lewis may be quite the gambler, but this one is a loser.
"You got to know when to hold 'em, know when to fold 'em,
Know when to walk away and know when to run." (Schlitz/Rogers)
Posted by: Bill | June 19, 2008 at 11:31 PM