JPMorgan to buy Bear for $2 a share

Yahoo! News ^ | March 16, 2008 | JOE BEL BRUNO and MADLEN READ

[Toddsterpatriot]

NEW YORK - JPMorgan Chase said Sunday it will acquire rival Bear Stearns in a deal valued at $236.2 million, a stunning collapse for one of the world's largest and most venerable investment banks.

JPMorgan Chase & Co. said the $2 a share, all-stock deal has received the required approvals from the federal government and the Federal Reserve. Bear Stearns shares close Friday at $30 a share.

The Fed will provide special financing to JPMorgan Chase for the deal, JPMorgan Chase said. The central bank has agreed to fund up to $30 billion of Bear Stearns' less liquid assets.

At almost the same time as the deal for control of Bear Stearns was announced, the Federal Reserve said it approved a cut in its lending rate to banks to 3.25 percent from 3.50 percent and created another lending facility for big investment banks. The central bank's official meeting is on Tuesday. Before the emergency move to lower the discount rate, which is the rate at which banks lend each other money, the Fed was widely expected to again cut its headline rate by as much as a full point to 2 percent.

The announcement from both the Fed and JPMorgan comes ahead of what some analysts expected to be a brutal day for global stocks. Already, before the announcements, New Zealand's markets opened drastically lower — then began to recover after the deal was unveiled.

A collapse of Bear Stearns could have created a further crisis of confidence in world financial markets amid a deepening credit crunch. JPMorgan's acquisition of Bear Stearns represents roughly 1 percent of what the investment bank was worth just 16 days ago.

The deal represented a 93.3 percent discount to Bear Stearns' market capitalization as of Friday, and roughly a 98.8 percent discount to its book value as of Feb. 29.

"The past week has been an incredibly difficult time for Bear Stearns," said Bear Stearns Chief Executive Alan Schwartz in a statement. "This represents the best outcome for all of our constituencies based upon the current circumstances."

[Toddsterpatriot]

Wow!

[Toddsterpatriot]

Ping!

[xcamel]

see:
http://www.freerepublic.com/focus/f-news/1986728/posts
(sidebar headline)

[jdm]

UK tycoon Joe Lewis loses $800m on Wall Street

[mek1959]

Tiiimmmbbbbeeeerrrr.......... Wow, monday is gonna be a blood bath. Who’s next.

[mysterio]

Wonder what kind of golden parachute the Sterns execs will get for running it into the ground.

[RightWhale]

Old news

[groanup]

According to Bloomberg.com, the Fed just announced a .25 cut in the discount rate and accessability to the discount window for primary dealers (non banks, IOW). Wow is right.

Also, discount loans will take a wide variety of loans and will have terms up to 90 days vs. the typical 30 days. This is BIG news.

[wideawake]

That is insane.

It's a credible source, however.

James Cayne was the worst CEO in the history of finance.

[groanup]

Also, discount loans will take a wide variety of loans

Should say a "wide variety of collateral".

[BGHater]

Who's next? The Repub. running for Pres has said his weakness is Economics. Enjoy the ride.

[Virginia Ridgerunner]

The past week has been an incredibly difficult time for Bear Stearns," said Bear Stearns Chief Executive Alan Schwartz in a statement. "This represents the best outcome for all of our constituencies based upon the current circumstances."

I wonder what the stockholder constituency is going to think about this? I smell lawsuits galore!

[Brilliant]

The lawyers are going to have a field day on this one.

[Vince Ferrer]

James Cayne was the worst CEO in the history of finance.

That is a good point. Most bad managers limit themselves to destroying their own company. They stop, or are stopped, before they can bring down the economy of the country they are in.

[BillM]

Boy, I’m glad I don’t hold financial stocks today. The shareholdedrs of Bear Stearns were held up against a wal and raped today.

[Hacklehead]

YIKES, BS stock lost 94% loss of its value since friday.

[Man50D]

The Fed Taxpayers will provide special financing to JPMorgan Chase for the deal, JPMorgan Chase said.

Bear Stearns makes bad business decisions and taxpayers foot the bill to help JP Morgan. Meanwhile Bush is also using taxpayer's money to bailout bad decisions made by homeowners and give them along with millions of other people a "tax rebate" through the Economic Stimulus Package Act of 2008. It's comforting to know politicians think taxpayers have an unlimited amount of money.

[Moonman62]

And not too long ago it was $150 a share.

[BenLurkin]

Yeah...what you said!

[Moonman62]

For all practical purposes that’s a prepackaged bankruptcy.