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.

[hedgetrimmer]

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?

[Attention Surplus Disorder]

“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.

[olezip]

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.

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.

[jimbo123]

UK tycoon Joe Lewis loses $800m on Wall Street

Make it $1.9B as of tonight.

[Toddsterpatriot]

You think this was caused by free trade? Stop sniffing glue.

[Dog Gone]

This is a finacial meltdown.

On a Sunday.

Buying that firm for $250 million? That’s not even what their payroll is.

[hedgetrimmer]

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.

[Hacklehead]

“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.

[rodguy911]

UNreal, I can’t belive it only brought $2.00!!

[wideawake]

The number of loyal Bear employees who had large bonuses trapped in vesting share programs is large.

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.

[BCrago66]

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.

[hedgetrimmer]

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.

[Moonman62]

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

At least he admits it, and will seek advice. W is worse and won't admit it.

[CatoRenasci]

I wonder if 2007 bonuses have been paid yet?

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....

[wideawake]

Thanks to you “free traders” the American taxpayer is going to bail out the Chinese who invested in Bear Stearns.

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.

[Moonman62]

Buying that firm for $250 million? That’s not even what their payroll is.

Someone posted on another thread that their building is worth $1.3 billion.

[UnBubba]

This is another Enron. Employees (who own about 25% of the outstanding common stock) were "locked-out" from selling their shares under their Employee Stock Ownership Plan, Profit Sharing Plan and Deferred Compensation Plan(s).

There were many millionaire employees last week who are not only broke now, but are also unemployed.

Sad.

[janetjanet998]

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

[Cowboy Bob]

The Repub. running for Pres has said his weakness is Economics.

Is Hillary's or Obama's knowledge of Economics any better than McCain's? I don't think so...

[Rutles4Ever]

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

What will they get? A bunch of lightbulbs?

[UnBubba]

Yes, but what is the outstanding debt on the building?

[bjs1779]

Them poor people who had it!

[Rutles4Ever]

As bearish as I’ve been, I’m speechless.

Where there’s one cockroach...

[geopyg]

“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.

[wideawake]

I wonder if 2007 bonuses have been paid yet?

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.

[bjs1779]

[TomasUSMC]

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!

[Gritty]

I'm speechless...

I think the "financial industry" just took a plunge over the edge into the abyss.

So did the US Dollar.

[rodguy911]

Yeah but who knows how much was owed on it.

[Rutles4Ever]

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.