Bank of America is buying Countrywide at a bit more than a 7 percent discount to its Thursday closing stock price in a $4 billion all-stock deal. Both shares sank in pre-market trade, and analysts were mixed on what to make of it. If nothing else, the deal puts some sense of value on the tumbling market for mortgage lenders, they said, but as the market reaction showed, there was little sense that the deal marks the end of mortgage-crunch losses. Within minutes of the announcement, CNBC’s Charlie Gasparino reported JP Morgan Chase was in “very preliminary” talks with Washington Mutual. JP Morgan bought a $4.2 billion portfolio of mortgages from Britain’s Northern Rock overnight.
Delta Air Lines plans to ask its board for permission to begin formal merger talks with both Northwest Airlines Corp and United Airlines parent UAL Corp today, according to the Wall Street Journal. Delta, which was bankrupt this time last year, wants to be the leader in a deal and ultimately choose between the two carriers. An acquisition of either airline by Delta would be worth at least $3.5 billion.
The New York Times is reporting that Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost double its original estimate. It is seen going to an outside investor for help, and the Times notes that CEO John Thain has said that while its 49 percent stake in BlackRock is not to be sold, noncore assets like its stake in Bloomberg, the financial news and information company founded by Mayor Michael Bloomberg of New York, could go.
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Merger rumors may finally be confirmed today as the Board of Directors for Delta Airlines Inc is expected to give permission to its CEO to pursue a deal, most likely with Northwest Airlines Corp or UAL Corp (parent of United Airlines). An IntellectSpace Knowledge Map of Delta’s ties Northwest, the company at the top of the list of potential merger targets, details a number of key connections that will likely factor into the upcoming negotiations. Delta and Northwest share numerous ties through past and current Directors and Senior Executives, but a few relationships clearly stand out as having the potential for being very useful in forming a deal:
• Delta CEO Richard H Anderson previously spent 14 years with Northwest, last serving as the company’s CEO from 2001 to 2004;
• Delta Executive Vice President (EVP), Operations Stephen E Gorman was previously an EVP at Northwest;
• Northwest EVP and CFO David M Davis was previously Delta’s Director of Finance; and
• Delta Director Paula Rosput Reynolds and Northwest Director Michael J Durham are well acquainted as Durham joined AGL Resources as a Director when Reynolds was Chairman, President and CEO.
These connections, both direct and through common entities, may have been key in motivating Delta to initially target Northwest as a merger partner. Also, if the companies do eventually agree to a deal, these strong connections are expected to be quite valuable in easing corporate transitions once all things become final.
- Posted by NewsVisual