Bank of America Corp. has agreed to acquire struggling Countrywide Financial Corp. for $4 billion, it was announced early Friday.
The takeover of the Calabasas mortgage lender is subject to regulatory approval and the votes of both company's boards and could net Countrywide Chief Executive Angelo Mozilo $115 million.
The market value of Countrywide has plunged to about $3 billion, which represents about two months' profit for Bank of America. The Charlotte, N.C., bank paid $21 billion cash over the summer for LaSalle Bank of Chicago.
Countrywide's stock has plunged in recent days amid intensifying anxiety among investors over a continuing surge in defaults and foreclosures afflicting the lender and others in the mortgage industry as home prices fall and the threat of a recession grows.
Bank of America last August propped up Countrywide by buying $2 billion of preferred shares convertible into a stake of about 16% in the lender.
Since then, Countrywide's default problems have continued to grow, sparking speculation that the company could face bankruptcy. Countrywide was forced to deny earlier this week that it planned to file for bankruptcy.
The takeover plan eliminates any need for the lender to declare bankruptcy, a move that could have had extreme economic consequences for the region and the rest of the nation.
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