Bank of America has finished purchase of hypothec broker Countrywide
12 July 2008Bank of America (BoA) has finished purchase of hypothec broker Countrywide Financial for 2,5 billion dollars. The sum of the transaction was on 37 % below initial 4 billion dollars because of decrease in BoA’s quotations. Opponents of merge prove, that together with Countrywide BoA has got billions dollars of write-offs and a legal cost in the future, and opponents object, that in long-term prospect the bank only will win from the transaction and after end of crisis it will receive a quarter of the hypothec market of the USA.
This transaction as a matter of fact has been begun in August, 2007 when BoA in exchange for 16 % of shares has invested 2 billion dollars into Countrywide and has helped bank to cope with the deficiency of liquidity, caused by credit crisis. In January of this year the company has agreed upon purchase of Countrywide, entirely through exchange of shares in the ratio 1 to 0, 1822. For that moment the transaction was estimated in 4 billion dollars, however, since then shares of bank have fallen in price almost on 40 % because of what the size of the transaction was reduced up to 2,5 billion dollars. The Bank has paid for the company about 4,3 dollars per share, besides, one year ago papers of the company cost over 35 dollars piece.
