JPMorgan Chase Buys Bear Stearns for $240 Million (Update2)
March 17 (Bloomberg) — JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. for about $240 million, less than a 10th of its value last week, after a run on the company ended 85 years of independence for Wall Street's fifth-largest securities firm.
Shareholders of New York-based Bear Stearns will get stock in JPMorgan equivalent to about $2 a share, compared with $30 at the close on March 14, the two companies said in a statement today. The U.S. Federal Reserve will provide financing for the transaction, including support for as much as $30 billion of Bear Stearns's “less-liquid assets.''
JPMorgan Chief Executive Officer Jamie Dimon bought Bear Stearns, once the biggest underwriter of U.S. mortgage bonds, for less than the value of its real estate after clients, alarmed by rumors of a cash shortage, withdrew $17 billion in two days. Faced with the prospect of bankruptcy, Bear Stearns CEO Alan Schwartz was forced to accept the deal as part of an effort by the central bank to stave off a broader market panic.
“Bear Stearns shareholders are at the short end of the stick,'' said CreditSights Inc. analyst David Hendler. “This was done in the market's best interests. They had to get this done or they would risk runs on other companies.''
Tags: bear, jp, morgan, stearns
Exactly. Everyone who pushes stock advice on you has an agenda, and that agenda is never in your best interest.Know the company you invest in well enough that you can describe it with more than one word.
This should tell you how grim this is. They were not priced correctly. $2 is way over paying.
There’s some good blogs that do that:http://www.cramerproject.com/stocks.php
Heh. :)I was thinking more along the lines of know more about your company than the name of the sector it operates in.
The “free market” value of Bear is zero, that is why the Fed had to “backstop” the take over. So they were bought for over their market value since their market value on Friday/Today was zero without BenB’s Black Helicopter Money.But yeah, I know what you mean.
wrong - bad analogy.Stock market is vast - there is more than enough quantity and volume in mid and large cap stocks to go around. If anything, having people act on recommendations (as Cramer home gamers infamously do) drives the price of the shares up, ultimately benefiting share-holders.
“Investment Bank” is two words:P
At the same time, no one could have really predicted how bad the situation was for Bear. You could say that it was not pretty, but three weeks ago, you would have been laughed out of the room if you said that they would be worth nothing by today.And if you’re going to respond and say that it was obvious and you saw it all along, then congratulations. I’m certain that you are wealthy beyond any imagination because you put the money where you mouth was and purchased put option out the ass.
Jeez, talk about steep requirements!
If you discovered gold in the stream behind your house, would you tell everyone? Would you go on TV, call the newspapers, post on message boards that gold can be found in that little stream?Then why would you share your knowledge of the markets with everyone? The only legitimate reasons: (a) you’re something of a Wall Street Journal, and your business is merely keeping people abreast of developments or (b) you are protecting your investments from adverse rumor.But you wouldn’t tell everyone. You don’t kill the goose that lays the golden eggs.
he’s a prick but he was right. they ARE being taken over. i fail to see how cramer thought that was a good thing for their shareholders, though. they weren’t exactly in a good position to negotiate terms.
MOAR: http://www.slate.com/id/2162460/
Because he’s an admitted inside trader.
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