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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."
Yes, but what is the outstanding debt on the building?
Them poor people who had it!
As bearish as I’ve been, I’m speechless.
Where there’s one cockroach...
“The number of loyal Bear employees who had large bonuses trapped in vesting share programs is large.”
I forget who I heard it from years ago - but they told me not to rely on my company’s stock options too much. If the company goes bad you’re out of a job AND your savings.
I’m thinking of changing my tagline to “Living on a borrowed dime is living on borrowed time”. The bad part is that all of us that don’t have huge debts are going to get hammered along with everyone else.
I think they actually have.
Anyone whose net worth was tied up in Bear Stearns is SOL.
If they are, say, 30 and they wind up holding JPM options, their retirement plan may one day recover.
There are going to be a whole lot more investment bankers looking for work in the 2nd quarter....
JPM's gonna cut like 5,000 people off the bat I would imagine.
And most of them will be, logically, back- and middle-office personnel, PCS brokers, etc.
OK, someone translate this crap. BS was at 30 bucks a share and JP gets to buy it at TWO DOLLAh A SHARE?
I would have maybe bought some at that price... well unless what they are trying to say is that it ain’t even worth that!
I think the "financial industry" just took a plunge over the edge into the abyss.
So did the US Dollar.
Yeah but who knows how much was owed on it.
The worst part about the 0.25% discount cut is that it telegraphs only a 0.25% cut for Tuesday. Futures have priced in 1%. 0.75% would be a disappointment.
ouch OUCH
OOOUUUCCCCCHHHHH!
Woooowwww. I don’t even want to see the market open tomorrow. Bloodbath indeed. $2 a share? Can’t they sell the chairs and computers for more than that?!?
Wow, so Chase gets all of Bear’s business/assets/stock for 2 bucks a share and has the fed foot a huge part of the bill to boot!? Can someone say “inside deal”?
As if enough power didnt already rest with the banks, now Chase has even more.
Very scary.
JP Morgan got to see what’s really on their balance sheet. The public didn’t on Friday, although one would have to be completely out of touch not to realize that there were BK rumors that caused the Fed loan to go into motion.
The worst part about the 0.25% discount cut is that it telegraphs only a 0.25% cut for Tuesday. Futures have priced in 1%. 0.75% would be a disappointment.
My theory is that with the phony inflation figures they gave out last week, they will do a 100 basis point reduction.
He also said he is reading Greenspan's book.
I wonder what the entrance wound on the lower grey bar will look like when the market opens tomorrow, LOL.
Right now, I’d settle for a few dozen of the over 40,000 BSC puts that traded Thursday. Yum!
That’s better than most politicians that don’t know economics, at all, yet say they do, and what really bad is they believe their own bull.
Knowing you don’t know, is above average for these clowns
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