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
Houston, we have a problem - Bankruptcy!
Jack: "What is happening in the US?! So, as we all know Bear Stearns more or less went bankrupt... Then JPMorgan buys them for 2 Dollars a share before the markets even open on monday! And the FED cuts rates by 0.25% on sunday?"
John: "Oh, I guess you didn't get the memo? I think we just went bankrupt, those dollars you were using are now worthless, it's time to launch the lifeboats!"
Jack: "Holly, Holly, Holly, John, we are 300 milles over Atlantic and without oxygen!"
Crom Alternative Money
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