Just What Is B of A Rescuing in the Countrywide Deal?

January 14, 2008

Countrywide Financial (CFC) was in the poor house, on its way to who knows what kind of future. Bank of America (BAC) agreed to buy Countrywide Financial (CFC) in an all stock deal valued at about $4 billion, or a little over $7/share. This deal comes less than five months after B of A invested $2 billion into CFC through a convertible debt investment with a strike price of $18/share.

Clearly there are a lot of questions surrounding this deal. Is B of A rescuing its initial investment from the uncertainty of CFC’s future? Is B of A making a marketplace bet? Do regulators have a chance to exhale? Are other lenders going to follow CFC into Darwin's survival chamber?

Read more to find out how to receive access to this and other A & O Briefs.