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Doug Krizner: In the U.K. this morning, stocks are rising. Especially shares in the troubled British mortgage lender Northern Rock.
They’re up more than 10 percent on reports an American private equity firm, JC Flowers, is ready to buy the company. From London, Stephen Beard reports.
Stephen Beard: JC Flowers is said to have raised £15 billion — that’s more than $30 billion — to buy Northern Rock. The private equity firm reportedly wants to keep the company intact, and not just grab the mortgage portfolio.
A pleasant surprise for the Rock’s beleaguered shareholders. Since the Bank of England baled out the company last month, the share price has fallen by 80 percent. The Rock’s reputation has been shattered.
Analyst Alisa Bayer is baffled by the American firm’s interest in the company — and the £15 billion price tag:
Alisa Bayer: I wouldn’t think at the moment anybody’s actually got an idea what price they would need to pay. And 15 billion seems a huge amount of money. They have, of course, got a huge loan book, but certainly all the big banks are backing off. Northern Rock have severe problems.
The Rock has been forced to borrow billions of dollars at punitive rates of interest from the Bank of England.
In London, this is Stephen Beard for Marketplace.
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