JPMorgan may raise Bear Stearns bid to $10 a share: report
24 March 2008
Mumbai: JPMorgan Chase & Co is expected to raise its offer for the collapsed Bear Stearns Cos from its earlier $2 a share to about $10 a share, sources close to the developments said. The bid, however, may still fall apart, the source added.
JPMorgan had on March 16 agreed to pay $2 per share in stock for Bear Stearns, the 85-year-old Wall Street investment bank that collapsed on the back of large subprime mortgage exposure.
A $10 per share offer would value Bear Stearns at over $1 billion. That price, however, is less than one-third of the stock's price on March 14, the last trading day before the original deal was announced.
The original agreement called for JPMorgan to swap 0.05473 of its shares for each Bear share.
Bear Stearns was seeking to authorise the sale of a 39.5 per cent stake to JPMorgan, which under local law it can do without shareholder approval. Both companies are incorporated in Delaware.
As part of the original agreement, the Fed had also extended a $30 billion credit line to JPMorgan to finance Bear's most illiquid assets.
JPMorgan was in talks with the Fed on Sunday night to assume the first $1 billion of losses on Bear assets before the $30 billion cushion kicks in, reports said.
Bear shares has risen by over 50 per cent to $9.15 with 50,500 shares changing hands today.