Sambol to Head Combined BoA/CFC Mortgage Operation
David Sambol has been chosen to head up the combined consumer mortgage business of Bank of America Corp. here once it completes its acquisition of Countrywide Financial Corp., Calabasas, Calif., which is expected in the third quarter of this year.
There have been questions raised about the deal but investors appeared relatively confident at press time last Thursday. Opposition to the transaction had come from SRM Global Fund, a Cayman Islands-based hedge fund that controls 5.19% of Countrywide's stock in a Securities and Exchange Commission filing Thursday. And the day previous Calabasas, Calif.-based company took a major writedown as part of its earnings (see related story). But at press time Countywide's stock price was generally trending upward.
In the filing, SRM Global said, "The merger agreement does not provide sufficient value to holders of [Countrywide's] common stock."
The company also issued a press release which said it will vote against the merger and that Countrywide is "strong and will rapidly return to profit on a standalone basis."
If this is not true, SRM Global wants to know what management did to maximize shareholder value.
SRM Global said shareholders would get less than $8 per share. But even after the fourth-quarter loss, it claimed Countrywide still has a book value "in excess of $20 per share, in addition to its substantial franchise value as the leading mortgage business in the United States and its insurance business." It added that it is not surprised that BoA will go forward on the deal because it is paying a substantial discount to book value.
SRM Global also asked the SEC to investigate movements in Countrywide's stock price in the days before the merger was announced.
"The transaction price was negotiated and we believe it is fair for both companies," said a BoA spokesman. Mr. Sambol is the current president and chief operating officer of Countrywide. A BoA release said he would continue to report to Angelo Mozilo, chairman and chief executive, until the deal is done.
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