Bear races to forge deal with JPMorgan

Discussion in 'Stocks' started by ASusilovic, Mar 16, 2008.

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    People close to the situation said that senior executives at Bear and JPMorgan, which is acting as a go-between for the Fed funds, had been locked in talks over a deal since Friday. “We’re definitely in the mix,” a senior person at JPMorgan said.

    With Bear’s shares sharply lower and its liabilities unknown, JPMorgan could end up paying very little to acquire the firm. Bear’s market value has plunged to just $3.5bn from a peak close to $20bn in January last year, largely because of frenzied selling of its shares in the past week.

    The value of Bear’s head office in a prime location on Madison Avenue, near JPMorgan’s offices, may account for a big portion of the eventual sale price.

    JPMorgan has been contacting clients to inform them of the coming consolidation. An exec-utive in its private banking side told one client that the private bank had taken control of $150m in assets of Bear’s clients.

    A deal is complicated by the fact that JPMorgan is believed to be interested in only some of Bear’s businesses, such as the mortgage business and the prime brokerage unit, and does not want other divisions, such as the investment bank.

    Other groups, including JC Flowers, the private equity firm that worked with JPMorgan on an abortive bid for the student loan group Sallie Mae, are believed to be looking at taking over some of Bear’s businesses.

    But people close to the situation said the need to agree a speedy deal made an orderly break-up of Bear among different bidders difficult, and it was more likely the firm would be acquired as a whole and split later.

    Other bidders that had been rumoured to be interested in Bear, such as Royal Bank of Scotland and Barclays Capital in the UK, and Citadel, the US hedge fund, are not believed to be talking to the company at present.

    Bear, JPMorgan, JC Flowers, Citadel, RBS and Barclays Capital all declined to comment.
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    Thanks for sharing that. They maybe would want to wait a few days for a better price but if they wait too long maybe they get taken down too much themselves along with a market selloff. If this does happen it would maybe temporarily, with an emphasis on that word, stabilize the market. But then there's the Goldman $3 billion loss news and all the other problems.