Countrywide buyout by Bank Of America...?

Question

So I see countrywide's stock is pretty darn cheap these days, would it be worth picking up some shares since BOA intends on buying them out. I know BOA shares aren't worth a whole lot these days either but way higher than countrywide...I guess my question is, if i buy countrywide shares for 4.30/share and BOA buys them out in July, will the countrywide stock then be worth whatever BOA is worth at that time? I don't really know a whole lot about the market but I am trying to figure out some ways to work it

Answer 1

It won't be a 1-1 swap of shares.

Answer 2

Countrywide's stock ceases to trade / exist when the merger is completed.

BofA's stock price should reflect what people believe Countrywide is worth minus the cost to acquire them.

Many people do believe that the housing stocks are oversold, so you could buy BofA stock as they would benefit from the future success of Countrywide.  

Personally, I think there's much more pain to come and you'll be able to pickup housing stocks at these levels months from now.