Shares in Countrywide Financial plunged more than 13% Monday after an analyst said Bank of America should walk away from its agreed $4bn deal to acquire the troubled US mortgage lender. Paul Miller of Friedman, Billings, Ramsey said in a note to clients that BofA should abandon the deal. Otherwise, he warned, the bank could face $20bn-$30bn in writedowns on Countrywide’s home loans. If it proceeds with the deal, BofA will probably renegotiate its original takeover price of $7.16 per share down to $2 a share or less, Miller wrote. Countrywide shares slid 13% to $5.20 in midday trade. The WSJ meanwhile reports that BofA says it will stick by the Countrywide deal.

This entry was posted by Gwen Robinson on Tuesday, May 6th, 2008 at 5:39 and is filed under Capital markets, M&A. Tagged with BofA, countrywide. Edit this entry.