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JPMorgan to Buy Bear for $2 a Share

This is just fascinating - top tier investment bank Bear Stearns was trading at $70 last week, but now has gotten bought out for $2: JPMorgan to Buy Bear for $2 a Share

Just four days after Bear Stearns Chief Executive Alan Schwartz assured Wall Street that his company was not in trouble, he was forced on Sunday to sell the investment bank to competitor JPMorgan Chase for a bargain-basement price of $2 a share, or $236.2 million.

The Federal Reserve and the U.S. government swiftly approved the all-stock buyout, showing the urgency of completing the deal before world markets opened. The Fed also essentially made the takeover risk-free by saying it would guarantee up to $30 billion of the troubled mortgage and other assets that got the nation’s fifth-largest investment bank into trouble.

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.

Amongst other news: the Fed went for another emergency rate cut, the dollar:yen rate is now 96, gold is at $1030/oz, Asian stock markets are down almost 4%, and the financial world is going to hell. :-) 

This entry was posted on Monday, March 17th, 2008 at 8:18 am and is filed under investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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    3 Responses to “JPMorgan to Buy Bear for $2 a Share”

    1. Gambler Says:
      March 17th, 2008 at 10:35 am

      JPM has to sell some of Bear’s assets to compensate for the toxic garbage, since FED has given 30Billion as a temporary loan. Indications of this was seen on the Indian Market with off market deals of shares held by Bears in Indian Market (being sold by JPM ??)

    2. Nagarajan Says:
      March 17th, 2008 at 11:31 pm

      Based on the rumors, I guess buying some puts on companies which are held by Lehman would be nice trade.

      We all know what happened to the last weeks rumors.

      Any Idea on how to find the companies in which Lehman has a holding without having to go through individual company share holding pattern.

      -Nagarajan

    3. Kaushik Says:
      March 18th, 2008 at 4:22 pm

      Nagarajan: Good question. I know that Bloomberg provides this data, but you would need to be a subscriber to get at it.