Sunday, March 16, 2008

JPMorgan Acts to Buy Ailing Bear Stearns at Huge Discount - New York Times

It's a buyer's market, and JP Morgan is doing some bargain shopping...

Reflecting Bear Stearns’s dire straits, JPMorgan agreed to pay just $236 million for the firm, a figure that includes the price of Bear’s soaring headquarters on Madison Avenue in Manhattan. At $2 a share, JPMorgan is buying Bear Stearns for a third of the price at which the troubled firm went public in 1985. Only a year ago, Bear’s shares fetched $170. The cut-rate price reflects deep misgivings about the firm’s prospects.

[...]

For JPMorgan, one of the few major banks to emerge relatively unscathed from the subprime mortgage crisis, the deal provides a major entry to prime brokerage, which provides financing to hedge funds, a source of enormous growth over the past decade, but a slowing business amid the market’s turndown.

JPMorgan Acts to Buy Ailing Bear Stearns at Huge Discount - New York Times

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