J.P. Morgan Chase to buy Bear Stearns for $2 a share

J.P. Morgan Chase to buy Bear Stearns for $2 a share

www.marketwatch .com

JPM has agreed to buy Bear Stearns [s:bsc] for $2 a share in a stock-swap deal, according to a report in the online edition of the Wall Street Journal citing people familiar with the matter.

(visit the link for the full news article)

This is a back room deal that not one of us could get in on. Couple this with the .25% rate cut that just now happened also and I smell a country with some serious Financial problems.

www.marketwatch .com
(visit the link for the full news article)

Here is another URL from Bloomburg news also
Bloomburg.com

So basically Bear Stearns just went bankrupt and was sold for $2/ share: the entire house of cards is going to come tumbling down soon. I wonder if you or I can buy a few shares at that price?

You could've bought puts friday, and made out like a bandit. I've been uber bearish for 9 months now and I am SHOCKED at the $2/share price being reported. Many people on a bearish trading forum thought it was a misprint for $20/share price. Anyone who shorted @$30 on the close friday is gonna make $28/share.

For Bear to go so cheaply says that their assets were even worse than anyone thought (and they thought it was bad). It was basically a bank run that brought them down. Not a bank run in the northern rock sense but by large account holders.

HUGE ramifications from this. Watch the markets tommorrow it's gonna be a wild ride.

Oh man this is huge! Historic! I'm really looking forward to the markets tomorrow.

So..... the Fed bails out Bear Stearns.... and then JP Morgan Chase gets to come in and basically steal the company? I don't know much about this portion of the financial world but this seems pretty shady, and obvious.

When you say it's going to be a wild ride, what exactly do you mean?

LEH will be next
Thats Lehman brothers

Next debacle

Followed by Washington Mutual...WM

Also, RDN, PMI, MTG, ABK and MBI are just about worthless.

The next big thing on wall street (about 6 months out) will be under funded pensions. This was big a few a years ago....but its going to be huge!!!!!!!!!!!!!!!!!

Originally posted by traderonwallst
LEH will be next
Thats Lehman brothers

Do you have any details on the $2 billion emergency line of credit they were given last week?

I agree they may be next. I also hold to my prediction that Citigroup will be the first major bank to bite the dust.


BTW where can I get me some major assets at 10c on the dollar with borrowed money?!

Man are shareholders gonna be pissed!! I smell lawsuits.

Gold jumped over $22 and all Asian markets are currently down multiple percentage points.

Did you notice the emergency .25 bp point cut with rumours of another .75 to come on Tuesday?

Gonna be an interesting week.
.

oh... and for those people who like to point fingers and claim that all this is just so much more "doom and gloom", please realize that

You have just witnessed a BANK RUN on Wall Street!!!

(minus the crowd of average Joes on your nightly news).


[edit on 3/16/2008 by Gools]

a .75% rate cut is not to going to fix this, a %5.00 rate cut can't. This is not good, I hope yall are ready to eat beans for a while.

[edit on 093131p://000 by shizzle5150]

Not really a run on the bank....but a wake up and shut the doors.

Well, I know its against what most of the people like to talk about on here, but have been short BSC since the $76 so this now becomes my best trade of all time. ABK and MBI were both up there, aong with the short on Enron back in 2000.

This is by far the best.

I have been short LEH for some time, rolling the options out each time at expiration. With all this news out there now........gonna let that run also now.

Been long steel companies for about a month, probably willg et some pain tomorrow, but might just add to the positions now that I am closing out of BSC tomorrow.

Anyone watching CNBC this morning? Instead of showing the normal canned replay till 5 AM or so, they're showing CNBC world. Looks like Asia is taking a big dump. They already know tommorrow is gonna be bad.I wonder how big the gap down is gonna be tommorrow. Bear is a mighty big Domino to fall. Everyone is saying Lehman could be next. S&P futures are showing a -30.00 ish open right now but Europe hasn't opened yet. Opex,regularly scheduled rate cut with a surprise teaser, and a short trading week plus Goldman and Lehman report earnings this week.

Oh my if the average joe don't know what's going on with this he will by tomorrow. BTW hong kong said they wern't matching any rate cut interesting fx happenings with the Yen/$ cross too.

The sale includes the building, which is valued at around a billion dollars. Maybe something's wrong with the economy?

Fox News
Bear's shares traded at more than $150 less than a year ago. The deal places Bear's stock at a 93% discount to Friday's close.

One of the larger losers in this deal might be British billionaire Joseph Lewis, who currently owns a 9.6% stake in Bear. In just a few months Lewis lost close to $800 million.

However, the employees of Bear Stearns will also be impacted by the fire sale. Bear is one-third owned by its employees, and has always had an "ownership culture" among its investment bankers and brokers. It was considered bad form for a Bear employee to sell their shares, and employees often received annual bonuses in the form of stock. Those bonuses are now basically worthless.

The $236 million price tag makes Bear a company worth less than the cost of its building, located on Madison Avenue in Midtown Manhattan, which was valued for approximately $1 billion, according to current real estate market estimates.

Originally posted by traderonwallst
Not really a run on the bank....

Ummm:

On the Brink of Collapse, Bear Stearns Gets a Lifeline From a Rival and the Feds

For Bear, the crisis started when market speculation grew that it might have to seize collateral -- mostly mortgage-backed securities worth next to nothing -- from the private equity firm Carlyle Group.

Carlyle runs a bond fund and has come under intense pressure during the past week from creditors demanding collateral to back their investments.

As speculation swelled in the market, investors, customers and lenders raced to withdraw their money or rescind their credit lines. By Thursday night, Bear Stearns Chief Executive Alan Schwartz said, the bank realized the withdrawals might outpace the bank's resources...

I'm sorry but that sounds an awful lot like a good old fashioned bank run to me.

Just because Joe public wasn't lined-up on the street doesn't mean that customers (other institutions in this case) weren't lining up to get their money and run for the doors.

The media won't call it what it was for obvious reasons so it's no wonder the public is having a hard time figuring out what exactly is going on.
.

Bear Stern is been wipe out and their investors are the losers in this one, as the bail out is not for their pockets but to keep the markets from collapsing today.

This becoming very interesting as nobody wants to tell who is going to be wipe out next.

What I meant by that....was not a run on the bank because it took place over the weekend. people could not get out. A run would allow the people a chance to get out, but the bottled up market would not let them..... They woke up and found the doors of the bank shut.

Thats what I meant.

I don't need to be told what a bank run is .... I think I know it already, but thanks Gools