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JP Morgan May Raise Bear Stearns Buyout Offer
By
Jen Chung
Published Mar 24, 2008
Modified Mar 24, 2008
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By
Jen Chung
Published Mar 24, 2008
Modified Mar 24, 2008
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Photograph of Bear Stearns by Mark Lennihan/AP
The NY Times reports "JPMorgan Chase was in talks on Sunday night for a deal that would quintuple its offer for Bear Stearns...in an effort to pacify angry Bear shareholders." Over a week ago, JP Morgan had agreed to pay $2/share for Bear Stearns stock, for a total payout of $236 million, but the new talks would raise the price to $10/share, making it a billion-dollar deal.
Bear Stearns' stock had been valued $30/share before the buyout, sending financial markets and Bear employees who own about 30% of the stock into considerable turmoil last week (the Fed also cut rates to soothe the market). The Federal Reserve had backed the $2/share buyout plan and also agreed to give JP Morgan $30 billion loan.
According to the Times, the Fed, which wants the $2/share plan to proceed so it doesn't look like a government bailout, was "balking at the new offer price" and it's "still possible the renegotiated deal might be postponed or collapse entirely." Bear's board is also looking to sell JP Morgan 39.5% of the company (the board does not need shareholder approval for sales under 40%), while some shareholders have thought about sending the firm into bankruptcy, possibly getting more than $2/share from creditors.
NY Magazine has a feature on the Bear Stearns collapse, plus An Idiot's Guide to Financial Crises. Also interesting: Bear Stearns executives unloaded $20 million in stock last December.
Tagged
bear stearns
economy
federal reserve
jp morgan
stock market
wall street
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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Gothamist is funded by sponsors and member donations
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