Banks
Accredited Soars on Lower Offer
TSC Staff
08/31/07 - 09:13 AM EDT
Accredited Home Lenders (LEND) surged 41% after the struggling mortgage company got a reduced buyout offer from Lone Star funds.
Lone Star offered to reduce the price it will pay to acquire Accredited, to $8.50 a share from the previous $15.10. The offer could break a legal standoff between the companies, which agreed earlier this year to a merger after the subprime lending business had begun to suffer but before it totally collapsed.
Since Lone Star initially made its offer for Accredited, numerous mortgage companies have shut their doors and even giants like Countrywide (CFC) and Thornburg (TMA) have encountered funding problems. Accredited has cut its workforce several times this year, with the most recent move taking the company's staff down to 1,000 workers from 2,600. Accredited employed 4,200 at year-end.
Lone Star subsequently said it didn't expect to complete the deal, contending that Accredited in its deteriorating state couldn't satisfy closing conditions. Accredited said it disagreed. Investors in Accredited had feared the company could end up with nothing but a $12 million breakup fee.
The revised Lone Star offer sent shares of Accredited up $2.59 to $8.90.