Best hope for Bear investors: more money from JPM
|
|
|
| Posted
:
Wed, 19 Mar 2008 18:48:07 GMT |
| By
:
Reuters |
| Category
:
US (Business) |
| News Alerts by
Email ( click
here ) |
|
US Business News |
Home
|
|
|
|
By Dan WilchinsNEW YORK (Reuters) - Bear Stearns Cos shareholders may be hoping that another suitor will emerge to challenge JPMorgan Chase & Co , but perhaps their best hope of getting a higher price is prying a few extra dollars from JPMorgan itself, analysts said.By getting enough shareholders to commit to voting against the deal and further questioning how it was done on a panic-stricken Sunday, they may be able to get JPMorgan to budge."There is a time element to this. All the other firms are in there, trying to swoop up Bear employees and customers....If I were JPMorgan, I'd pay an extra dollar a share just to get the deal done in a reasonable period of time," said Gordon Marchand, portfolio manager at Sustainable Growth Advisers in Stamford, Connecticut.There's been a lot of talk in the past few days about a counteroffer, but so far there's been little sign of a credible outside bidder at all, let alone one that would pass muster with the U.S. government."People are fantasizing," said Keith Wirtz, president and chief investment officer at Fifth Third Asset Management, which manages $22.5 billion.Bear Stearns shares were trading at $5.08 on Wednesday afternoon, more than double the value of JPMorgan's offer. Still, Bear Stearns shares were down 12 percent on Wednesday after surging the day before, in what could be a sign of waning optimism about a higher price.JPMorgan Chase & Co agreed to buy Bear on Sunday in a deal now worth more than $340 million, or about $2.36 a share. The deal happened with the encouragement of the Federal Reserve, which feared that if Bear went out of business, the entire U.S. financial system could be shaken.JPMorgan for its part is not worried about a rival bidder and does not plan to adjust the terms of the deal, a person familiar with the bank's thinking said. JPMorgan declined to comment.But there may be many parties voting against the acquisition, including credit derivatives traders hoping to push Bear into bankruptcy to collect on their credit default swaps.Investors that bought Bear Stearns shares when they were over $100 or over $150 might want much more than a few dollars a share, and may also vote against the acquisition in its current form. It's not clear if a few extra dollars would appease them. But a few extra dollars might appease investors that bought on Monday at, say, $3 a share.WHITE KNIGHT--A FAIRY TALE?And some investors are hoping for other potential buyers to emerge. According to the New York Post, Bear Stearns Chairman James Cayne and top shareholder Joe Lewis are looking for a bidder to top JPMorgan's offer.The two men have contacted private equity firms, including J.C. Flowers and Kohlberg Kravis Roberts & Co , as well as overseas banks Barclays , HSBC , Credit Suisse , and Royal Bank of Scotland , the paper said, citing sources familiar with the matter.The likelihood of another buyer coming in is remote, investors said. Few U.S. banks have the capacity on their balance sheets to take on the potential liabilities at Bear, even with $30 billion of financing that JPMorgan Chase received from the Federal Reserve for Bear Stearns assets.The Fed would not likely offer financing to a foreign bank for a deal, because the central bank cares more about preserving market stability than getting the highest possible price for Bear shareholders, an arbitrageur said.And private equity funds are also unlikely to get Fed financing, and would also not provide the same assurance of stability to Bear customers, the arbitrageur said..(Additional reporting by Jennifer Ablan, Joseph A. Giannone, and Chris Reiter, editing by Dave Zimmerman)
(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
|
|
|
|
|
|
Related News
Wall Street stocks gain on optimism for US economy
New York - US stocks rose Wednesday after three separate reports offered signs that the US recovery is gaining steam. Consumer spending and new home sales rose more than expected in October, while weekly jobless claims dropped to their lowest rate si...
Washington Post shutters all US bureaus outside capital - Summary
Washington - The Washington Post will close its remaining domestic bureaus outside the US capital, the paper said Wednesday, in an attempt to cut costs in the prevailing economic climate. The daily said it would close bureaus in New York, Chicago and...
Washington Post shutters its remaining bureaus outside US capital
Washington - The Washington Post will close its remaining bureaus outside the US capital, the paper said Wednesday, in an attempt to cut costs in the prevailing economic climate. The daily said it would close bureaus in New York, Chicago and Los Ange...
FDIC: 'Problem' banks at 16-year high in US
Washington - The number of US banks in danger of collapse has risen to the highest level in 16 years, a government regulator reported Tuesday in a sign that the country's worst financial crisis in decades is still lingering. The Federal Deposit Insur...
American shoppers lace up racing shoes for Black Friday
Los Angeles - Up to 134 million Americans are expected to splash out with their cash when the holiday shopping season kicks off on traditional Black Friday. The National Retail Federation Tuesday said it anticipated that the easing recession will sen...
US stocks edge lower on revised growth figures
New York - US stocks fell slightly on Tuesday as government figures showed that last quarter's economic rebound was smaller than initially thought. The Commerce Department in an updated estimate said the economy grew at an annual rate of 2.8 per cent...
US economic rebound smaller than thought; Fed optimistic - Summary
Washington - The US economy's rebound from a deep recession was smaller than initially thought, according to new government figures Tuesday, while the Federal Reserve said it expects the country's recovery to pick up...
|
|
|
|
|
|
|
|
