Countrywide Financial Corporation (NYSE: CFC), the largest lender in the Unites States, announced just a few minutes ago that it has received a $2 billion investment from Bank of America Corporation (NYSE: BAC). The transaction was completely and funded earlier today. 
Angelo Mozilo, Countrywide CEO said "Bank of America's investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success. The terms of the deal say that Bank of America acquired $2 billion in the form of non-voting, convertible preferred stock yielding 7.25% annually.
Kenneth Lewis, CEO of Bank of America, said that turmoil in the stock market has led to an undervaluation of Countrywide. He also said, "This investment reflects our confidence in their business and recognizes the importance of the company in providing home financing across the country."
The news has been greeted with wide open arms on wall street tonight as CFC shares have jumped 21.54% to $26.52 in after hours trading and BAC shares have risen $1 a share or 1.94% to $52.65 per share.
The importance of this deal to Countrywide simply cannot be understated, and the fact that a major bank is willing to invest in this troubled industry should help overall confidence in the industry outside of Countrywide as well.
» Stocks Strength Dissolves from GrowYourFunds
After yesterday evenings investment from Bank of America Corporation (NYSE:BAC) into Countrywide Financial (NYSE:CFC) many investors, myself included, believed the market was setup for another strong day today. While the day is far from over, the early... [Read More]
Tracked on: August 23, 2007 10:07 AM | Permalink to Trackback