Posted on 03/16/2008 4:35:03 PM PDT by 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."
Gosh, calling everyone so you “free traders” can celebrate the subsidies the government is handing out to the finance sector? Do you really think printing more money and handing it out to the stock market and financial sector is going to stop the train wreck you “free traders” have caused?
“UK tycoon Joe Lewis loses $800m on Wall Street”
That was based on Friday’s closing stock price of $30 a share. Now he can calculate his losses on a $2 per share price.
There's the problem. Any company named "Bear" cannot be as good as one named "Bull!" ...should be no surprise whatever in the stock market.
This is a finacial meltdown.
On a Sunday.
Buying that firm for $250 million? That’s not even what their payroll is.
Thanks to you “free traders” the American taxpayer is going to bail out the Chinese who invested in Bear Stearns. No free market here,none at all.
“And not too long ago it was $150 a share.”
That would make a 99% loss. I feel sorry for BS employees who had most of their 401K in BS stock.
UNreal, I can’t belive it only brought $2.00!!
Billions of dollars of personal wealth has been lost over the past year.
I guess a passel of deep-out-of-the-money options on JPM stock is better than nothing.
Prediction: Tomorrow, someone - or maybe multiple people - will walk in a circle in front of Bear Stearns headquarters (383 Madison in NYC, between 47th and 48th) wearing nothing but a barrel, painted will with the words Bear Stearns Investor. TV cameras will eat it up.
I expect high praise tomorrow night for my prescience.
Bear Stearns is a ‘global investment bank’. Yes, it was caused by the falsely named “free trade” deals that allowed American companies to ‘invest’ abroad with the guarantee by the US taxpayer(against our will) to protect them if they get in over their heads. You know I’ve been saying this for years. And now it is coming to pass.
At least he admits it, and will seek advice. W is worse and won't admit it.
Anyone whose net worth was tied up in Bear Stearns is SOL.
There are going to be a whole lot more investment bankers looking for work in the 2nd quarter....
Bear Stearns is gone.
I was not bailed out. It was purchased by a private enterprise for $240 million dollars.
The Chinese investors in Bear Stearns took an enormous bath.
I understand that you think just making up fake assertions is amusing, but to those of us endowed with the rudiments of an intellect it is obviously just a waste of bandwidth.
Someone posted on another thread that their building is worth $1.3 billion.
There were many millionaire employees last week who are not only broke now, but are also unemployed.
Sad.
This is terrible...much lower then expected..this means GS had many more problems if the price is only 2$/share...and if they did liley other compnaies do too..
this was the reason for the rate cut just announced
Is Hillary's or Obama's knowledge of Economics any better than McCain's? I don't think so...
What will they get? A bunch of lightbulbs?
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