Bank of America Corp. has emerged as a possible White Knight for ailing Countrywide Financial Corp. The deal would represent quite a bargain for BoA, which was rumored to be considering the same acquisition one year ago when shares of the mortgage banker were priced at more than five times their current level.
The Wall Street Journal today reported that the Charlotte, N.C.-based bank is in advanced discussions to acquire Countrywide.
Citing people familiar with the situation, the story said details are not yet clear about the timing or likelihood of a deal.
The Financial Times reported one year ago that the two were in talks about a possible merger, around the time Countrywide shares traded at $45. With shares of Countrywide having slipped below $5 earlier today, the current deal represents a bargain for BoA. Following word of the deal, Countrywide shares soared to around $3 higher than yesterday's close.
BoA made a $2 billion investment in the Calabasas, Calif.-based lender in August, at the height of the credit crisis.
This week has been especially rough for Countrywide, which was forced to deny rumors of a possible bankruptcy, was dumped from the approved investor list of warehouse lender Southwest Securities, FSB, and reported a surge in foreclosures and delinquencies.