Mozillo agreed to sell CFC to Bank of America for $7.17/share, or more accurately a .1822 share swap where CFC shareholders would get basically 1/5th of a share of BAC for every share they own.
If you take BAC's record high price of $54.77, that'd be just under $10/share for CFC shareholders. Mozillo sold $15B of equity, roughly $20/share of assets for between 50% and 75% discount.
Of course, its not a big deal for him because he's entitled to a $120M severance package.
Subscribe to:
Post Comments (Atom)
2 comments:
One of the largest home-lenders has been bought for a song. Pretty telling about how financials should be avoided (except for the short-term overreactions) this whole year except for the ones with no exposure to SIV's or CDO's. What a pitiful mess...
I think financials are alright for the long haul, you just need to play the odds. For every E*trade there's a Citadel and for every Countrywide there's a Bank of America. Someone always benefits long term from these sorts of crises if you're patient.
The key though is to take advantage of yield in highly distressed areas with a small handful of such issues. A good example is a bundle I picked up (BRT, ABR & CBF) which compose an average of 18% yield and have appreciated roughly 9% since I've purchased them already.
Post a Comment