Last weekend JPMorgan Chase & Co. (NYSE: JPM) struck a deal to acquire -- or steal -- The Bear Stearns Companies (NYSE: BSC) for $2 a share (or $236 million) with the help of $30 billion in Fed financing. For the first time in my life, I was amazed to read in the New York Times that JPMorgan is now negotiating to raise its bid to $10 a share -- or $1.2 billion.

Why is this happening? Because some big shareholders plan to fight the deal. A third of Bear Stearns is owned by employees and British billionaire financier Joe Lewis, the firm's largest shareholder, who had invested $1.26 billion in Bear over the last year at an average price of about $104. JPMorgan needs 51% shareholder approval for the deal to go through. Last night, Bear's board was negotiating to sell JPMorgan 39.5% of the firm -- leaving it in a position to need only 10.5% of shareholder support to complete the transaction.

However, even that 39.5% deal may not go through as the Federal Reserve, which guaranteed $30 billion of Bear's most illiquid assets, is sensitive to criticism that it bailed out Bear. It's worried that allowing that deal will subject it to even more criticism. On Sunday JPMorgan was negotiating with the Fed to take some of the heat off the Fed by assuming at least the first $1 billion in losses on Bear assets before the $30 billion kicks in.

Meanwhile, JPMorgan's merger contract contained at least one glaring legal mistake -- a sentence that requires JPMorgan to guarantee Bear's trades even if shareholders voted down the deal. That could allow Bear's shareholders to seek a higher bid while still forcing JPMorgan to honor its guarantee.

JPMorgan CEO Jamie Dimon, is apoplectic about that one and he is calling the CEOs of other investment banks asking them not to poach Bear's talent. Dimon is hoping to head off all these problems by paying five times more for Bear so he can close the deal.

Dimon may now be regretting that he let himself get mauled by Bear.

Update. The New York Times reports that JPMorgan upped its bid to $10 a share. JPMorgan will buy the 39.5% stake and Bear's directors will vote their shares, 5%, in favor of the deal. Thus JPMorgan needs just 5% more support for approval. Bear shares are trading at $11.53 -- above the deal price -- suggesting something more may be in the works.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.