Bear near announcing sale to JPMorgan: source
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Sun, 16 Mar 2008 22:33:00 GMT |
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Reuters |
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By Dan Wilchins and David LawderNEW YORK/WASHINGTON (Reuters) - JPMorgan Chase & Co is close to rescuing the fifth-largest U.S. investment bank, Bear Stearns Cos Inc , a person familiar with the matter said on Sunday, in a deal that could be announced in the next few hours.The Wall Street Journal said on Sunday that Bear Stearns could sell itself for around $2.2 billion, or less than $20 a share.The low sale price, equal to about two-thirds the company's $30.85 closing share price on Friday, signals just how dire the situation is for the 85-year-old investment bank.The deal with JPMorgan Chase has not been signed yet, said the person Reuters spoke with on condition of anonymity.Bear Stearns' cash reserves were drained by fleeing customers on Thursday, and on Friday the bank secured emergency funding from the Federal Reserve, extended through JPMorgan Chase.The Fed is widely seen as having provided the financing to prevent Bear Stearns from toppling, and potentially bringing other banks down with it.Bear Stearns trades interest-rate swaps, credit default swaps, and other derivatives with dozens of banks globally. If Bear Stearns went bankrupt, all of its trading partners could suffer."It wouldn't just be Bear's problem, it would be everyone's problem," said Marino Marin, an investment banker at Gruppo, Levey & Co who has restructured banks in the past but is not involved in this deal. "It would be apocalyptic," Marin added.JPMorgan Chase, the third largest U.S. bank and one of the few global banks relatively unscathed by the credit crunch, is looking to limit some liabilities in acquiring Bear Stearns, the Wall Street Journal reported.(Editing by Tim Dobbyn)
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