Bank of America Seen Urging Investors to Reject $6 Offer (Update1)

Bank of America story updated with CEO comments in final three paragraphs.

NEW YORK ( TheStreet) -- Bank of America ( BAC) is expected to recommend on Tuesday that investors reject an offer to tender their shares for $6, a roughly 3.6% premium to Monday's closing price, according to a JPMorgan research report.

On Nov. 22, IPIC Group, a South African investment company, said it would buy up to $500 million in Bank of America stock for $6 a share, giving it a 4.9% stake in the bank. The offer expires Dec. 23 but can be extended to March 30, 2012.

In urging investors to reject the offer, Bank of America is expected to cite the fact that IPIC can walk away from the offer under several scenarios while the deal would be binding on investors. For example, any share issuance by Bank of America would be grounds for IPIC to walk away, and Bank of America has issued some 311 million shares in recent days.

Bank of America must file a recommendation on IPIC's offer by the end the day Tuesday. A Bank of America spokesman declined to comment on the JPMorgan report, and the bank has not commented on IPIC's offer.

JPMorgan has an overweight recommendation on Bank of America.

Bank of America CEO Brian Moynihan made no mention of the offer when he spoke to investors Tuesday at a conference hosted by Goldman Sachs.

He described the bank as "grinding through" the weak economy "as long as Europe doesn't drag us back," and he said the bank's fourth quarter trading results are on track to beat the dismal third quarter numbers.

Moynihan said he would not ask regulators to approve a dividend increase until the bank has its "total capital picture solved," and it sure it will get the go ahead from regulators. Bank of America currently pays a dividend of a penny per share.

-- Written by Dan Freed in New York. Follow this writer on Twitter.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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