Bear Stearns Cos. reached an agreement to sell itself to J.P. Morgan Chase & Co., as worries grew that failing to find a buyer for the beleaguered investment bank could cause the crisis of confidence gripping Wall Street to worsen.
The deal calls for J.P. Morgan to pay $2 a share in a stock-swap transaction, with J.P. Morgan Chase exchanging 0.05473 share of its common stock for each Bear Stearns share. Both companies' boards have approved the transaction, which values Bear Stearns at just $236 million based on the number of shares outstanding as of Feb. 16. At Friday's close, Bear Stearns's stock-market value was about $3.54 billion. It finished at $30 a share in 4 p.m. New York Stock Exchange composite trading Friday.
On Dec. 31 Bear Stearns closed at $88.25/share.
...and the Fed's in for another $30 billion.
In addition to the financing the Federal Reserve ordinarily provides through its Discount Window, the Fed will provide special financing in connection with this transaction. The Fed has agreed to fund up to $30 billion of Bear Stearns’ less liquid assets.
Capitalism rawks!
...misty watercolored...
Buy Bear Stearns (BSC - Cramer's Take - Stockpickr) despite all the toxic hedge fund handwringing, Jim Cramer said Friday on CNBC's "Stop Trading!" segment.
Cramer said that on June 22, 2007, when Bear closed at $143.75/share.
They bought it for $270 million.