Analyst says CFC is only worth $2 per share. http://biz.yahoo.com/ap/080505/countrywide_financial_mover.html?.v=1 How will the market act if CFC goes under?
"The agreement calls for Bank of America to create a merger subsidiary, Red Oak Merger Corp., into which Countrywide will be merged. The merger subsidiary becomes the surviving company. Bank of America could absorb Countrywide's bank affiliate, with $130 billion of assets, but keep Countrywide's outstanding debt at the Red Oak entity, which in theory could file for bankruptcy." That is such BS
right now the acquisition price is supposed to be $8 and the stock is trading for 5.48 so it's trading like there is a 40% chance that the deal goes to $2 so I don't think many people will be shocked if the deal price gets lowered or falls through completely. Bank of America basically has a call option to buy the company so they will do it if it is in their best interests, in other words how much money they will lose needs to be weighed against damage to there reputation by looking like idiots.
The market could care less. Why do you think the market would care if CFC goes under, it cared LITTLE for BSC then the DOW ran over 1000 points, so lets see, if CFC goes under I wouldnt worry a bit, just go long, the federal reserve will pump more liquidity into the system, they always do.
http://online.wsj.com/article/SB121003048094369081.html?mod=rss_markets_main BofA Says Bid to Buy Countrywide Is as Planned Despite doubts swirling around Countrywide Financial Corp., Bank of America Corp. isn't trying to slip out of or renegotiate its $4.1 billion acquisition of the troubled mortgage lender, say people familiar with the thinking of the bank's top managers. Uncertainty about the acquisition has intensified as Countrywide's performance continues to weaken and amid a recent disclosure that the Justice Department is scrutinizing the business practices of the U.S.'s largest home lender by volume.