Bank of America Corp., one the largest banks in the United States agreed to acquire Countrywide Financial Corp. for almost $4 billion, approximately $7.16 per share in stock. Countrywide's market value has decreased by more than 6 times to $3.66 billion during the past year due to first quarterly loss in 25 years.
After this deal Bank of America will become the nation's largest mortgage lender, having about 25% of the mortgage industry’s market share and combined assets will exceed $1.8 trillion, second to Citigroup, which has more than $2.35 trillion in assets.
Bank of America's credit rating is under review for a potential downgrade because of this deal and other legal issues at Countrywide, whose lending practices are currently under examination by attorneys general, while the SEC is investigating potentially improper trading by company officials.
Countrywide has been experiencing problems after defaults have been on the rise. Its market value fell below $3 billion for the first time in a decade due to bankruptcy fears. Countrywide’s stock price was $45 last year. At the end of 2007, more than 7 percent of payments were more than 60 days late.