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Countrywide merger faulted, BofA names mortgage exec
NEW YORK |
NEW YORK (Reuters) - Bank of America Corp (BAC.N) said on Thursday that Countrywide Financial Corp's CFC.N second-highest ranking executive will run its mortgage business, and a large Countrywide investor said it opposes the bank's roughly $4.4 billion purchase of the nation's largest mortgage lender.
David Sambol, Countrywide's chief operating officer and top official other than Chief Executive Angelo Mozilo, will run Bank of America's mortgage unit after the merger.
Sambol became Countrywide's COO in September 2006 after the sudden departure of his predecessor Stanford Kurland.
Though Countrywide lost more than $1.6 billion in the second half of 2007, Bank of America Chief Executive Kenneth Lewis said on January 11 he wanted to retain some senior company executives, whom he called "very, very good operators."
The second-largest U.S. bank expects to finish buying Calabasas, California-based Countrywide in the third quarter. The combined company would make one in four U.S. home loans. Bank of America is based in Charlotte, North Carolina.
The merger drew opposition from hedge fund SRM Global, which in a regulatory filing said it has taken a 30 million share, or 5.19 percent, stake in Countrywide.
"(Countrywide's board) and its advisers should fully explain to shareholders the reasons why they have agreed to recommend the transaction to shareholders at less than half of the company's book value," SRM said. "The company is strong and will rapidly return to profit on a stand-alone basis."
SRM said it may try to talk to both companies and other Countrywide shareholders.
Bank of America spokesman Scott Silvestri said: "The transaction price was negotiated, and we believe it was fair for both companies."
Countrywide did not return requests for comment.
The merger terms call for Countrywide shareholders to receive 0.1822 of a Bank of America share for each of their shares. It valued Countrywide on January 11 at $7.16 per share.
Analysts have said Countrywide is hard to value given a surge in borrower defaults, deterioration in credit markets, investigations and lawsuits over its lending practices.
Countrywide's market value has fallen roughly $22 billion in the last year.
On Tuesday, Countrywide posted a larger-than-expected $421.9 million fourth-quarter loss, but Lewis said "everything is a go to complete this transaction."
SRM, based in the Cayman Islands, has also pushed for changes at ailing British lender Northern Rock PLC NRK.L.
Separately, Bank of America said credit-card chief Bruce Hammonds will become global consumer credit executive, a new position, after the merger.
Hammonds was MBNA Corp's chief executive before Bank of America bought that credit-card issuer in 2006.
Sambol will report to Hammonds, and Hammonds to consumer and small business banking President Liam McGee. Floyd Robinson will remain Bank of America's consumer real estate chief until closing, and work on integration with Sambol and Hammonds.
In afternoon trading, Countrywide shares rose 35 cents, or 5.4 percent, to $6.82, while Bank of America shares were up $1.64, or 3.9 percent, at $43.85.
(Additional reporting by Mark McSherry; Editing by Maureen Bavdek, Leslie Gevirtz)
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