The business stories that matter, by Fortune's Colin Barr
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January 31, 2008, 10:19 am

Hedge fund chafes at Countrywide buyout terms

Not everyone is overjoyed with Bank of America’s (BAC) deal to buy Countrywide (CFC). Hedge fund SRM, which has taken a 5.2% stake in Countrywide, said in a regulatory filing Thursday that it is “of the view that the merger agreement does not provide sufficient value to holders” of Countrywide shares. The news comes as shares in Countrywide, which have dropped 86% over the last year amid a steep decline in the housing market, continue to trade sharply below the indicated value of the merger. Even so, there’s a substantial body of thought to the effect that if Bank of America hadn’t come to Countrywide’s rescue three weeks ago, Countrywide shareholders would now find themselves holding stock that is essentially worthless, given the company’s repeated brushes with bankruptcy. SRM, which has been buying and selling shares over the past two months at prices between $5.20 and  $9.12 a share, obviously doesn’t subscribe to that view. It says in the filing that it “may initiate discussions with [Countrywide] and may communicate with the [Countrywide's] executive management and board of directors, with other holders of the issuer’s common stock, and with B of A from time to time regarding the proposed terms of the merger agreement.” Good luck with that.

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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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