CHARLOTTE, N.C. -- Bank of America announced this morning it has agreed to buy troubled mortgage giant Countrywide Financial Corp. for $4 billion.
The all-stock deal values Countrywide shares, which have been on a roller-coaster this week, at $7.15, a discount from the $7.75 the shares closed at Thursday, after news of the merger talks surfaced. Countrywide shares plunged more than 50% earlier in the week on rumors the company was planning to file for bankruptcy, then soared more than 50% yesterday on the BofA rumors.
Countrywide, which provdies correspondent services for hundreds of credit unions, has seen its stock price plunge almost 90% this year amid troubles in the subprime and overall mortgage market. The company reported a loss of $1.4 billion for the first three quarters of the year.
The deal comes seven months after BofA invested $2 billion in Countrywide for a 16% stake. The investment came in the form of convertible preferred shares which were convertible into common shares at $18 each.
