Dow member JPMorgan (JPM $40 1) has acquired the fifth largest US investment bank Bear Stearns (BSC $4) for a dramatically low price of $2.00 per share, or about $236 million. According to the Wall Street Journal, Bear Stearns had a stock market value of $3.5 billion on Friday and was worth $20 billion in January 2007. The fire-sale price of the deal is related to the massive decrease in BSC's client confidence, which prompted a liquidity scare, forcing the brokerage firm to make a decision to sell the firm at any price or face bankruptcy. The Federal Reserve will also assume management of $30 billion of BSC's debt to help JPM finance the deal. A spokesman for China's CITIC Securities said it was unclear regarding the current situation between BSC and JPM and, as well as the prospects of its original proposed $1 billion investment in the struggling brokerage house.
[3/24/08] JPMorgan Chase (JPM $46 1) is reportedly in talks to raise its offer to buy Bear Stearns (BSC $6) from $2 per share to $10 per share in an effort to win over angry Bear Stearns shareholders, according to the New York Times. People familiar with the matter said the Federal Reserve, which must approve any new deal, has thus far balked at the latest price, in part because a sweetened offer may give critics ammunition to argue Bear's shareholders are being rescued. As a result, the Times said efforts to secure a renegotiated agreement could be delayed or collapse. BSC is up sharply. Neither of the parties involved commented.
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