Bear Stearns deal , legal ?

K

Kicking

Ok I don't understand this deal . Is this legal?
Shareholders got raped by JPM and the government here.
I wasn't long BSC but if I were I would want to kill someone probably now .
Seriously, if the assets were really worth less than a tenth of the market cap, wasn'this company a fraud ? Or the markets that priced it , a fraud ?
The government basically gave BSC to JPM on a plate, for almost nothing. Had there been no Fed intervention, the stock would not have gapped down 80% at the open and people would have had the time perhaps to get out and cut losses. That alone is very disturbing.

The US capitalism is broken, it's nothing more than a big scam.
It's outrageous.
 
It traded above $2 all day. Closed at $4.81. It seems that the shareholders are not going to accept the deal. Either they are in denial, or something else is at play.

Probably they're betting on a real Fed bailout. If the Fed doesn't, then they'll vote down the deal and bring the whole market down with them.
 
Quote from james_bond_3rd:

It traded above $2 all day. Closed at $4.81. It seems that the shareholders are not going to accept the deal. Either they are in denial, or something else is at play.

Probably they're betting on a real Fed bailout. If the Fed doesn't, then they'll vote down the deal and bring the whole market down with them.
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Correct on the first part, wrong on the second part. Remember that the shareholders are the LAST IN LINE when it comes to laying claim to assets.

These people like Joe Lewis are in tremendous denial.
 
Quote from Kicking:

Ok I don't understand this deal . Is this legal?
Shareholders got raped by JPM and the government here.
I wasn't long BSC but if I were I would want to kill someone probably now .
Seriously, if the assets were really worth less than a tenth of the market cap, wasn'this company a fraud ? Or the markets that priced it , a fraud ?
The government basically gave BSC to JPM on a plate, for almost nothing. Had there been no Fed intervention, the stock would not have gapped down 80% at the open and people would have had the time perhaps to get out and cut losses. That alone is very disturbing.

The US capitalism is broken, it's nothing more than a big scam.
It's outrageous.
More...

You are misinformed.

Do you not think that the purchase of Bear was open to other investment banks over the weekend?

It was.
But right now JP Morgan is the only firm with a flexible ( and strong ) enough balance sheet to make this transaction doable.

No one else on the Street wanted to have to assume all of the litigation that will obviously come about with 250,000 transactions on the balance sheet! That is why JPM says that they will most likely incur $6 billion in expenses tied to this deal.
 
Quote from Landis82:

You are misinformed.

Do you not think that the purchase of Bear was open to other investment banks over the weekend?

It was.
But right now JP Morgan is the only firm with a flexible ( and strong ) enough balance sheet to make this transaction doable.

No one else on the Street wanted to have to assume all of the litigation that will obviously come about with 250,000 transactions on the balance sheet! That is why JPM says that they will most likely incur $6 billion in expenses tied to this deal.
More...

Could it be as simple as JPM having enough cash on their books in combination with low leverage business structure to take the risk of buying Stearns? They can keep themselves afloat while they dust out Stearns and find the assets. Hmmm?
 
Quote from Landis82:

You are misinformed.

Do you not think that the purchase of Bear was open to other investment banks over the weekend?

It was.
But right now JP Morgan is the only firm with a flexible ( and strong ) enough balance sheet to make this transaction doable.

No one else on the Street wanted to have to assume all of the litigation that will obviously come about with 250,000 transactions on the balance sheet! That is why JPM says that they will most likely incur $6 billion in expenses tied to this deal.
More...

The market is saying this deal is worth $12-13 billion to JPM. Wouldn't other firms find that a rather appealing payoff?

Also, if JPM is the only buyer, why is Bear trading above $4?

If you believe your own post, you should be betting on a big fall in BSC.
 
BSC is valued at $650 mill - their Manhattan office alone is worth twice that.

I wouldn't be surprised to see other bidders enter the fray. Buffett is close to former CEO Ace Greenberg, and has the cash, pockets, and reputation needed to do this kind of deal fast. I'm sure he'd be interested in that $12 billion premium rather than see JPM get it.
 
Quote from Landis82:

Right now JP Morgan is the only firm with a flexible ( and strong ) enough balance sheet to make this transaction doable.

No one else on the Street wanted to have to assume all of the litigation that will obviously come about with 250,000 transactions on the balance sheet! That is why JPM says that they will most likely incur $6 billion in expenses tied to this deal.
More...

BSC stock now at $7. Still sure that JP Morgan are the only ones capable of doing the transaction?

I remember you lambasting other people for not actually trading. So, how many BSC shares are you short? Do you have a stop or are you just going sit and pray it falls back to $2 before someone buys the company?
 
A big advantage that JP Morgan Chase has if I'm interpreting the news right is that by lending to Bear Stearns they have had access to Bear Stearn's books and are in a far better position to appraise its assets and liabilities.

Something I do not get is why Bear Stearns was not given the opportunity to avail of the Fed's discount window to boost its liquidity. I seem to recall reading that if Bear Stearns could have lasted until March 27 they'd be able to. The natural question to me is why didn't the Fed just allow them to do so now ahead of time instead of the March 27 date?

From these two points it does seem as if the Fed and JPM are pushing this bailout merger on Bear Stearns.
 
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