JP Morgan buys Bear Stearns for $2 a share? Can't believe my eyes!

Anyone know what banks helping with this? Does this valuation make sense? Are we really this fucked?

$20 a share, not $2... big difference

It's front page. $2, plain as day. What gives?

DAMN that's fucking crazy.

"J.P. Morgan agreed to buy Bear Stearns for $2 a share in a stock-swap transaction, people familiar with the matter say. J.P. Morgan will exchange 0.05473 shares of its common stock per one share of Bear Stearns stock. Both boards have approved the transaction."

There you go, buddy.

i got the e-mail alert and thought that the $2 was a typo also.

my eyes bugged out when i saw 2. holy hell

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"its the running joke now, we now have fair trade with china so they send us poisoned sea food and we send them fraudulent securities."

J.P. Morgan Chase agreed to buy Bear Stearns for $2 a share in a stock-swap transaction, people familiar with the matter say. J.P. Morgan will exchange 0.05473 shares of its common stock per one share of Bear Stearns stock. Both boards have approved the transaction.

People familiar with the discussions said all sides were pushing hard to complete an agreement before financial markets in Asia open for Monday trading. "None of these things is done until they're done," Treasury Department spokeswoman Michele Davis said Sunday afternoon. "But I think everyone's expectation is sometime in the early evening hopefully" the deal will be done.

One stumbling point appeared to be the amount of risk that J.P. Morgan would absorb in any type of transaction. While J.P. Morgan is eager to snap up some of Bear Stearns assets -- such as its prime brokerage business that caters to hedge funds -- Chief Executive Officer James Dimon was reluctant to pursue the deal without certain assurances that would protect his firm's exposure, said people familiar with the matter.

Despite the emergency funding from J.P. Morgan and the Federal Reserve that was announced Friday and gives Bear access to cash for an initial period of 28 days, the clock is ticking against the 85-year-old company. Regulators, bankers and investors are concerned that the firm could plummet even further when markets open Monday. A continued exodus by parties that Bear trades with could even cause the investment bank to collapse.

So would anyone who shorted the stock at $30 make 15x their money?

Poor Jimmy Cayne. His net worth just plummeted.

Things must have detiorated rapidly over the weekend. BSC market cap was $4.08 bn at Friday's close. JP just paid under $300 mm for Bear.

I too thought it was a typo and am now bugging out with the "who's next" question...

JPM took on a huge amount of exposure but damn that's a steal, their headquarters alone is worth $1.2 bn.

JP Morgan Chase is offering to buy troubled investment bank Bear Stearns for between $15 and $20 a share, CNBC has learned.

Jin Lee / ASSOCIATED PRESS
Bear Stearns

Bear's board is currently meeting to discuss the proposal, which based on Bear's 118 million shares outstanding, would be valued at between $1.8 billion and $2.4 billion.

A deal in principle could be announced Sunday night, although the agreement would still need shareholder approval.

Here's what makes this a tricky situation: without shareholder approval, there is no real deal, so other banks and clients may be reluctant to deal with Bear on Monday unless it's part of a well capitalized JP Morgan.

Because of this, most executives inside Bear believe the Federal Reserve and Treasury will play some role in making sure there is a backstop if the shareholder approval isnt reached.

Of course, the deal itself could fall apart at the last minute, which would mean Bear would have to find another buyer, possibly JC Flowers.

An offer of $20 or less would be well below Bear's closing stock price of $30.85 on Friday, which was already down 47% for the day. As one senior Bear executive--who like most of the senior team is paid and continues to hold Bear stock--puts it: "based on the information i'm getting, lets just say I wont be retiring early." ...

Lol@Closer121.

how could CNBC be 10+ dollars a share off? In the span of 12 hours?

UK Telegraph is reporting $2.00. Holy fucking shit...

why did bear stearns accept this? why couldnt other firms bid? and what does this mean for current employees/summer/ft hires?

Nyc123, offered to buy @ $20 and closed the deal @ $2 are completely different dumbass.

I am pretty sure other firms couldn't bid because, the Fed asked JPM last week to lend Bear the money under new plan. The Fed also approved the deal at $2/share.

I'm waiting on the conference call to start right now I'll let you know what I hear that isn't yet available online.

Oasising, I realize that, I didn't know that a separate story came out regarding the closing when I made the post because I had read the $20 story only a few minutes before I read this post so I figured the OP made a typo and was grossly exaggerating the story to all the readers, turns out I was wrong

There are going to be redundancies that need to be taken care of, but it will be awhile before that gets soreted out. For current FT analyst and associate offers I doubt this does anything. For summer interns it might mean a smaller % are offered FT jobs.

Gotcha, yeah everything happened so fast that it's hard to keep up with the news.

matty-- thanks. please keep us updated.

http://investor.shareholder.com/jpmorganchase/presentations.cfm

presentation is here, conference ongoing. JP sees $1b added revenue, talks about added prime brokerage (obviously), extended equity and energy platforms. He didn't say much beyond the powerpoint, questions coming shortly.

Check it out.

i have heard from BSC employees themselves that they will most likely get laid off this week; although who knows, i surely hope that this is not the case

The BSC building is worth 1 billion, so JP Morgan Chase is buying a building for 75% off, and getting a company thrown in.

A company with 33 billion in mortgage exposure still, and atleast 2 billion in sub-prime.

yea they have taken on a lot of exposure

Will they rescind FT associate offers?

I see in the presentation that there will be $6bn of deleveraging, litigation, and consolidation and accounting reconciliation costs, and I think they explained the cost of deleveraging. Could someone just go over what it means exactly? From my understanding, JPM is going to buy bear and just pay down some debt, but why should shareholders be paid less than what everyone thought they were going to be paid ($20 vs $2) just so JPM can play with capital structure? I'm trying to imagine other scenarios in which company A buys a very leveraged company B. A still has to pay full market value for B shares, right? Or is JPM just saying that bsc shares are simply not worth even $20?

How much of Bear's workforce will get cut?

Can someone explain how the $2 thing can even theoretically happen? If others were allowed to bid, wouldn't they pay waaay more than this? I'm really curious...

Has there been a significant change in the Fed Funds Implied Probability? If someone could pull this up, I would be greatly appreciative of it. Now, looking at BSC and how this affects the FFIP... if BSC is going under and the FFIP hasn't seen a significant increase towards the 75BP Cut rate or higher, something is really fucked up here. I know we're all thinking it considering the Fed meets tuesday... now that's going to be an extremely fun meeting. Once Bad News Ben gets up there... how many points should we say the market will drop by?

Maybe others were not allowed to bid since JPMorgan was in charge of the temporary fix, maybe they had full control

$2 is for the equity. I am guessing that there are liabilities which JPM will have to take over from Bear, therefore JPM will end up paying more than $2.

why didnt the shareholders get to vote? is that even possible, if the top management approves it, then the sale goes thru?

If the deal falls through, they will file for bankruptcy meaning equity value will be $0. It doesn't matter what the share price was at close on Friday.

Shopping the company to other bidders takes time - time that Bear didn't have (as I said before, come Monday morning they would have filed for bankruptcy without a buyer in place). Also, important to note that the deal went through because the Fed is providing a $30 billion guarantee for some of Bear's liabilities. The Fed would not provide this kind of financing to just anyone. It is because it is JP Morgan that the Fed agreed to provide this.

others had taken a look (JC Flowers):
"When Bear Stearns invited potential buyers for detailed presentations by department chiefs yesterday, only JPMorgan and private equity firm J.C. Flowers & Co. showed up, according to people familiar with the talks." http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aWbXzzlzN...

Most importantly though, few banks were as familiar with Bear (JPM was a rumored acquiror this summer) and few had the capital/knowledge to make a decision following a due diligence process <= 3 days.

my question is, why on the call was JPM so confident that shareholders would approve the deal (other than for PR reasons)? what shareholder would approve a deal for less than the price of its headquarters?

$2> liquidation value of the firm. So, I still think it's a reasonable offer if JP takes care of the debt and moves all these pass-throughs on their balance sheet. I couldn't believe when I read yesterday that 186,000,0000 shares changed hands on Friday! Cannot confirm it, but I heard most of the shares outstanding are actually owned by employees, more than 25% of the company. They will really get screwed--doubble the pain if they lose their jobs and investments all at once.

fuck fuck fuck a duck screw a kangaroo ( or in this case a bear)!

Just wow. I wonder what kind of liabilities they're assuming, that's the only explanation for the $2 per share equity value.

Sorry to anyone working there or set to work there. Lots of uncertainty lies ahead, I'm not even sure what to advise here.

http://www.mergersandinquisitions.com/
Mergers & Inquisitions

Dosk17, when this whole saga is over, you will have a lot to write about for your mergers & inquisitions blog. Get your pen ready. ha ha.

i can't imagine that jp morgan would want much of bear's ib franchise. i'm not in the know or anything, but i suppose we could see lots of of talented people out of a job by the end of this week.

just a guess...but i think lehman brothers stock is gonna take a huge hit tomorrow.

I am digging out Bear Stearn's recruiting souvenir from last year. Might have some antique value some years from now. Lol.

What does it mean when you guys are referring to the "clearing" business?

haha

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"its the running joke now, we now have fair trade with china so they send us poisoned sea food and we send them fraudulent securities."

that doesn't seem right. that would be completely against all free market principles... how can you get such an awesome deal just because you are in charge of the temporary fix?