JPMorgan Boosts Offer for Bear Stearns Buyout

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Wall Street investment bank JPMorgan Chase has agreed to pay more money for the troubled securities firm Bear Stearns. Last week, Bear Stearns almost melted down because of the credit crisis, and JPMorgan hoped to scoop up the firm at a fire-sale price. Then, top shareholders in Bears Stearns balked.


NPR's business news starts with a better deal for Bear Stearns.

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MONTAGNE: Wall Street investment bank JPMorgan Chase has agreed to pay more money for the troubled securities firm Bear Stearns. Last week, Bear Stearns had a near meltdown because of the credit crises, and JPMorgan was hoping to scoop up the firm at a fire sale price. It almost did, until top shareholders in Bear Stearns baulked. NPR's Jim Zarroli reports.

JIM ZARROLI: JPMorgan Chase says it will pay the equivalent of a about $10 a share for Bear Stearns, which is about five time the previous price, but still far below what the stock was fetching a year ago. Bear announced on March 14th that it was undergoing a severe cash crunch. Investors had been pulling money out of the firm because of anxiety about its mortgage losses. Two days later, JPMorgan Chase said it was acquiring the firm in a deal that had been brokered by the Federal Reserve. The Fed also agreed to help finance the acquisition, protecting JPMorgan against potential losses. The deal valued Bear Stearns at the bargain basement price of $2 a share, or $236 million in total. And some shareholders said they would oppose the deal. JPMorgan Chase said the new deal would provide significantly greater value to shareholders, many of whom are Bear Stearns employees.

The terms of the deal have also been changed so that JPMorgan Chase will now bear the first $1 billion of losses from any of Bear's debt. The Fed will cover the remaining losses up to $29 billion. Some critics had attacked the terms of the acquisition, saying it put tax payers on the hook for Bears' bad investment decisions. JPMorgan Chase chairman Jamie Dimon said he believes the new terms reflect the values and risks of the company, and he said he looks forward to closing the deal promptly. Jim Zarroli, NPR News, New York.

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JPMorgan Quintuples Buyout Offer for Bear Stearns

JPMorgan Chase & Co. said Monday it has upped its offer to buyout ailing Bear Stearns Co., offering $10 a share instead of its original offer of $2 for the investment bank that collapsed under the subprime mortgages crisis.

Although the figure represents a five-fold increase over JPMorgan's earlier this month, it is still less than one-third of the stock's value on March 14, the last day of trading before the proposed sale. Last year, Bear Stearns shares hit a high of $172.

The higher offer is aimed partly at appeasing angry Bear Stearns shareholders, who saw their investment virtually wiped out by the initial offer.

Under the revised terms of the deal, each share of Bear Stearns common stock will be exchanged for 0.21753 shares of JPMorgan common stock.

The original Bear takeover agreement was forged with the support of federal regulators. The U.S. Federal Reserve is balking at the higher price, The New York Times said, citing people involved in the talks.

From NPR reports and The Associated Press



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