BSC/JPM valuations

C

Cutten

BSC equity is valued at $650 mill on the close. JPM went up 10% - a gain of almost $13 billion. BSC is trading way above the JPM bid price, implying another bidder coming into the fray.

If BSC equity is worth $13 billion to JPM, then shouldn't it be capitalised at a hell of a lot more than $650 million? Is there a relative value opportunity here - short JPM go long BSC?
 
Amazing. The knife keeps getting sharper and it's reaching terminal velocity. If you didn't anticipate the drop, I wouldn't try catching it now.
 
Who cares what BSC was worth last quarter, that's a lifetime ago in this market. JPM's market action today values BSC at $96/share. 12.8B / 136M shares plus the $2 acquisition price.

How is BSC worth $96/share to JPM, when it was worth $70 a week ago, and considering it's been losing customers all week?

I like the deal, I think JPM was smart to snap up Bear Stearns for a pittance, but I think the market severely overreacted in bidding up JPM. I think there's a perception that if JP Morgan is willing to make a deal like this, they must have their own house in order, and I don't think that's necessarily true.

Martin
 
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