What will Countrywide Financial shareholders receive when the Bank of America acquisition is complete?

Question

I'm having trouble finding the specific details of the deal, and was considering buying CFC stock if there is room for arbitrage still. How many shares of CFC must be owned to receive 1 share of BAC? And what compensation will CFC shareholders receive if they hold fewer than the required number of shares of CFC for one complete share of BAC?

Answer 1

while i don't know the details of share acquisition in this case, i can tell you that with every share of BAC you recieve, you'll be recieving a piece of their enormous debt. With the housing market the way it is, and huge payments on their debt, Country Wide is taking on a sick orphan in the middle of an epidemic.

Unless you're completely opposed to the idea of an impending recession, housing isn't going to generate much in the near future - in country wide's case, perhaps not even enough to cover their basic expenses, much less churn a profit.

Finally, keep in mind that most acquisitions don't come at a discounted price. BAC had a whole team of guys to make sure that the company was bought for what it's highest possible value, so the best-case-scenario value you would acquire in BAC shares will already be built into the price.

Invest wisely!

Answer 2

I own both companies.  I believe it is .1822 shares of Bac per one of CFC.  Double check though.  That is on memory.

Any fractional shares will be liquidated to cash by your transaction agent (brokerage, bank)