JPMorgan Chase & Co was in talks to quintuple its offer to buy Bear Stearns Cos to US$10 per share in an effort to pacify angry Bear Stearns shareholders, the New York Times said yesterday.
JPMorgan's original agreement on March 16 to pay US$2 per share for Bear Stearns was widely considered a fire-sale price for the 85-year-old Wall Street investment bank. Bear Stearns collapsed in a liquidity crisis after suffering large subprime mortgage losses and falling confidence in dealing with the company.
The original agreement had won support of federal regulators, but the US Federal Reserve is now balking at the new price, the newspaper said, citing people involved in the talks.
As a result, the renegotiated merger might be postponed or collapse, it said.
A US$10 per share offer would value Bear Stearns at more than US$1 billion. That price, however, is still less than one-third of where the stock traded on March 14, the last trading day before the original merger was announced.
It is also less than 10 percent of where the stock traded for much of last year.
Representatives of Bear Stearns, JPMorgan and the Fed were not immediately available for comment.
Jamie Dimon, JPMorgan's chief executive, grew convinced the merger was in jeopardy after spending much of the last week taking calls from indignant shareholders, the newspaper said, citing people involved in the talks.
Among these shareholders was the British entrepreneur Joseph Lewis, who spent more than US$1 billion on some 12.1 million Bear Stearns shares, including some as recently as March 13.
Last week, Lewis said he would take whatever action was needed to protect his investment, and may encourage Bear Stearns and third parties to pursue other transactions.
Bear Stearns shares closed on Thursday at US$6.39, reflecting investor expectations that JPMorgan might raise its bid, or another suitor might offer a sweetened price. JPMorgan shares closed at US$45.97.
In an attempt to speed majority shareholder approval, Bear Stearns' board was trying to authorize the sale of 39.5 percent of the firm to JPMorgan, the NYT said.
State law in Delaware, where JPMorgan and Bear Stearns are incorporated, allows a company to sell up to 40 percent without shareholder approval.
A spokeswoman for JPMorgan declined to comment Sunday night, the NYT said.
A Bear Stearns representative could not be reached.
A spokesman for the Federal Reserve would not comment on the central bank's involvement in the negotiations, but denied it had directed the original sale price, the newspaper said.
Citing people involved in the talks, the newspaper said the central bank originally directed JPMorgan to pay no more than US$2 per share to assure that it would not appear that Bear Stearns shareholders were being rescued.
As part of the original transaction, the Fed also extended a US$30 billion credit line to JPMorgan to finance Bear Stearns' most illiquid assets.
JPMorgan was in talks on Sunday night with the Fed to assume the first US$1 billion of losses on Bear Stearns assets before the US$30 billion cushion kicks in, the newspaper said.
The original agreement called for JPMorgan to swap 0.05473 of its shares for each Bear Stearns share.
Some large Bear Stearns shareholders have considered opposing the merger to send the company into bankruptcy, where they might hope to get more than US$2 per share from creditors, the newspaper said.
BACK IN THE NEIGHBORHOOD: The planned transit by the ‘Baden-Wuerttemberg’ and the ‘Frankfurt am Main’ would be the German Navy’s first passage since 2002 Two German warships are set to pass through the Taiwan Strait in the middle of this month, becoming the first German naval vessels to do so in 22 years, Der Spiegel reported on Saturday. Reuters last month reported that the warships, the frigate Baden-Wuerttemberg and the replenishment ship Frankfurt am Main, were awaiting orders from Berlin to sail the Strait, prompting a rebuke to Germany from Beijing. Der Spiegel cited unspecified sources as saying Beijing would not be formally notified of the German ships’ passage to emphasize that Berlin views the trip as normal. The German Federal Ministry of Defense declined to comment. While
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
A senior US military official yesterday warned his Chinese counterpart against Beijing’s “dangerous” moves in the South China Sea during the first talks of their kind between the commanders. Washington and Beijing remain at odds on issues from trade to the status of Taiwan and China’s increasingly assertive approach in disputed maritime regions, but they have sought to re-establish regular military-to-military talks in a bid to prevent flashpoint disputes from spinning out of control. Samuel Paparo, commander of the US Indo-Pacific Command, and Wu Yanan (吳亞男), head of the People’s Liberation Army (PLA) Southern Theater Command, talked via videoconference. Paparo “underscored the importance
The US House of Representatives yesterday unanimously passed the Taiwan Conflict Deterrence Act, which aims to disincentivize Chinese aggression toward Taiwan by cutting Chinese leaders and their family members off from the US financial system if Beijing acts against Taiwan. The bipartisan bill, which would also publish the assets of top Chinese leaders, was cosponsored by Republican US Representative French Hill, Democratic US Representative Brad Sherman and seven others. If the US president determines that a threat against Taiwan exists, the bill would require the US Department of the Treasury to report to Congress on funds held by certain members of the
RSS