Countrywide’s retail distribution will enhance Bank of America’s network of more than 6,100 banking centers throughout the US. Bank of America (BOA) is planning 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 0.1822 of a share of Bank of America stock in exchange for each share of Countrywide. The purchase is expected to close in the third quarter of 2008.
Bank of America is expecting $670 million in after-tax cost savings in the transaction, or 11% of the expense base of the two companies’ mortgage operations. About one third of those savings would come in 2009, two thirds would be realized in 2010 and savings would be fully realized in 2011.
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.
Kenneth Lewis, Bank of America chairman and CEO, said: Countrywide presents a rare opportunity for BOA 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. Countrywide customers will gain access to a broad set of consumer products including credit cards and deposit services. Home ownership is a fundamental pillar of the US economy and over time it will be a key area of growth for BOA.
