Investors doubting Countrywide-B of A merger

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Reports over the weekend that Countrywide faces an FBI investigation for possible securities fraud are causing some investors to doubt that Bank of America will purchase Countrywide.

Reuters: Countrywide Financial Corp shares fell more than 12.5 percent on Monday following reports it was being investigated by the Federal Bureau of Investigation for possible securities fraud.’

More: ‘The decline came amid growing fears that Bank of America Corp, which agreed in January to buy the largest U.S. mortgage lender for $4 billion, might renegotiate or abandon the purchase, which it has said it expected to close in the third quarter.’ Reuters quotes a Bank of America spokesman saying the deal is ‘on track.’

That’s not what the market is saying today. At 11:30 a.m., Bank of America shares were trading at $35.32. The takeover offer is .1822 B of A shares for every Countrywide share, which translates to an offer of $6.44 this morning. Countrywide shares are trading well below that amount -- at $4.41. That’s a discount of 31.5% below the offer. The discount on Friday was 24%. Translation: investors have doubts about this deal.

Analysis: If Bank of America doesn’t want Countrywide, does anyone want it?

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Photo Credit: Countrywide chairman Angelo Mozilo, by AP