A large Countrywide Financial shareholder opposed to the company's takeover by Bank of America said on Wednesday it has increased its stake in the largest U.S. mortgage lender to 5.48 percent from 5.19 percent.
SRM Global, a Cayman Islands-registered hedge fund run by British investor Jon Wood, also accused Countrywide management of repeatedly rejecting its requests for a meeting since late December. Bank of America announced the acquisition on Jan 11.
"The merger transaction with Bank of America is not in the best interests of its shareholders," the fund said in a Feb. 13 letter to Countrywide's board, Chief Executive Angelo Mozilo and Chief Operating Officer David Sambol.
Under the merger agreement, Countrywide shareholders are to receive 0.1822 of a Bank of America share for each share they own. This values Countrywide at about $4.6 billion, or $7.89 per share.
SRM said the terms value Countrywide at less than half of its book value, and that the board rushed to sell rather than consider alternatives such as remaining independent or conducting an auction.
The fund's 31.7 million share stake is worth roughly $225 million, based on Countrywide's Wednesday closing price, and grew from 30 million shares two weeks ago.
Countrywide did not immediately return requests for comment. SRM disclosed its increased stake and the letter in a U.S. Securities and Exchange Commission filing.
According to a Bank of America filing earlier Wednesday with the SEC, Countrywide told its advisers prior to the merger that it faced the prospect of "financial distress" had it not agreed to be acquired by the second-largest U.S. bank.
Countrywide shares closed Wednesday up 18 cents at $7.08 on the New York Stock Exchange. Bank of America shares rose 51 cents to $43.33 on the Big Board.
SRM has also played an active role in the possible rescue or nationalization of ailing British lender Northern Rock.