Bank of America Corp., based in Charlotte, N.C., has reached a definitive agreement to purchase Calabasas, Calif.-based Countrywide Financial Corp. in an all-stock transaction worth approximately $4 billion.
The purchase will make Bank of America the nation's largest mortgage lender and loan servicer. The company says it will benefit from Countrywide's broader mortgage capabilities, including its extensive retail, wholesale and correspondent distribution networks.
With the purchase, Bank of America expects to gain greater scale in originating and servicing mortgages in the U.S., as Countrywide had $408 billion in mortgage originations in 2007 and has a servicing portfolio of about $1.5 trillion with 9 million loans. The purchase also includes Countrywide's lender-placed insurance and other businesses.
‘Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation's premier lender to consumers,’ says Kenneth D. Lewis, chairman and CEO of Bank of America. ‘Countrywide customers will gain access to a broad set of consumer products, including credit cards and deposit services. Homeownership is a fundamental pillar of the U.S. economy, and over time, it will be a key area of growth for Bank of America.’
After closing the deal, Bank of America plans to operate Countrywide separately under the Countrywide brand – with integration occurring no sooner than 2009. Under the terms of the agreement, shareholders of Countrywide would receive .1822 of a share of Bank of America stock in exchange for each share of Countrywide.
The agreement has been approved by Bank of America's board of directors and Countrywide's board of directors and is subject to approval by Countrywide's shareholders and customary regulatory approvals, Bank of America notes.