There must a few other market saps out there like me who are wondering why Bear Stearns (NYSE: BSC) closed yesterday at $5.91 per share when it has been reported continuously for the last 72 hours that JP Morgan Chase (NYSE: JPM) was only paying $2 per share to take over the company. Now it is being reported that the figure is $2.34 -- Oh boy!
I say market saps because I hold the stock and could sell it for more than the $2 but I don't. Why not? What am I hoping for? Until this morning there has not even been the slightest rumor that some white knight will come to the rescue and acquire the company for more than the measly $238 to $276 million price tag being discussed.
Yesterday I wrote that what "JP Morgan Chase (NYSE: JPM) is paying for Bear Stearns (NYSE: BSC) would not have been enough to buy the brand name last year, never mind the whole company." This being the case, I would love to see the line by line worksheet that the negotiators (some might call them scoundrels) assisted by the Federal Reserve Board worked up to determine the acquisition price. I understand that JPM is assuming a mountain of liabilities but I thought that the Fed has given JPM assurances that they would cover short term losses. In the long run, some of that bad paper is going to be worth billions of dollars.
I would like to know what the actual risks are that JPM is assuming? On the other hand, no one else has stepped forward to do the deal. So what are the possibilities? We have all heard that truth is stranger than fiction. I have a feeling that if we ever learn the truth about the BSC - JPM deal, this will be demonstrated once again.
Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture and planning firm. He writes Chasing Value and Serious Money columns. Disclosure: I am a shareholder in BSC.
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Reader Comments (Page 1 of 1)
3-19-2008 @ 12:52PM
bob sakamano said...
the big rumor is the building they are housed in is worth much more then that.... who has a couple hundred million to buy
3-19-2008 @ 1:30PM
Steve in Denver said...
I think the big reason BS got sold down the river is that there was never any, and now no possibility of , proper underwriting of the loans in their CDO's. Being a builder / broker in Denver I literally watched as mortgage brokers forged loan applications in their car in front of houses and then went in and had the buyers (very frequently non english speaking) sign them having no idea what was there. On the other hand the new building BS has is worth about $ billion based on recent NY commercial prices. I'm sure some foreign (more than like soverign funds) will snap it up.
3-19-2008 @ 1:41PM
Steve in Denver said...
Ohh, and I forgot! These foreign buyers who will most probably buy the BS (yes, this is a double entendre) building will use foerign funds to do it which means they'll get it for about 65 cents on the dollar. When is America going to gets its cajones screwed back on???!!! I'm getting real tired of looking like a bunch of saps to the rest of the world.