Photograph of Bear Stearns' headquarters (center) and JP Morgan (right) by Mark Lennihan/AP
With JP Morgan now offering $1.2 billion for troubled Bear Stearns, it's expected the deal will close on April 8. JP Morgan needed 50% of Bear Stearns shareholder approval, and the new $10/share price would give them 45% yes votes (5% is expected from bondholders); an analyst told USA Today the revised deal "virtually guarantees a yes vote at $10 per share, vs. an almost certain no vote at $2."
The Federal Reserve has given its blessing to the higher deal as well as changed its involvement. Originally, the Fed would have assume $30 billion of Bear's potential losses, but now it will "provide financing for $29 billion of Bear's most illiquid assets, with JPMorgan backing the first $1 billion of potential losses." But, as Dealbreaker points out, some are now calling this a bailout.
In spite of the more expensive price, JP Morgan CEO Jamie Dimon is still getting credit for salvaging the deal, even while paying almost a billion more. Analyst Jeffrey Harte told Bloomberg News, "When the dust settles, this will be viewed as a good transaction for JPMorgan.''
