JPMorgan Chase & Co. (NYSE: JPM) and The Bear Stearns Companies Inc.
(NYSE: BSC) announced an amended merger agreement regarding JPMorgan
Chase’s acquisition of Bear Stearns.
Under the revised terms, each share of Bear Stearns common stock would
be exchanged for 0.21753 shares of JPMorgan Chase common stock (up from
0.05473 shares), reflecting an implied value of approximately $10 per
share of Bear Stearns common stock based on the closing price of
JPMorgan Chase common stock on the New York Stock Exchange on March 20,
2008.
In addition, JPMorgan Chase and Bear Stearns entered into a share
purchase agreement under which JPMorgan Chase will purchase 95 million
newly issued shares of Bear Stearns common stock, or 39.5% of the
outstanding Bear Stearns common stock after giving effect to the
issuance, at the same price as provided in the amended merger agreement.
As discussed below, the purchase of the 95 million shares is expected to
be completed on or about April 8, 2008.
The Boards of Directors of both companies have approved the amended
agreement and the purchase agreement. All of the members of the Bear
Stearns Board of Directors have indicated that they intend to vote their
shares held as of the record date in favor of the merger.
The JPMorgan Chase guaranty of Bear Stearns’
trading obligations has also been significantly clarified and expanded.
For more information, the guaranty agreement will be filed publicly and
the parties will provide a Question and Answer document describing the
guaranty in further detail on their respective websites. JPMorgan Chase
has also agreed to guarantee Bear Stearns’
borrowings from the Federal Reserve Bank of New York.
The Federal Reserve Bank of New York’s $30
billion special financing associated with the transaction has also been
amended so that JPMorgan Chase will bear the first $1 billion of any
losses associated with the Bear Stearns assets being financed and the
Fed will fund the remaining $29 billion on a non-recourse basis to
JPMorgan Chase.
“We believe the amended terms are fair to all
sides and reflect the value and risks of the Bear Stearns franchise,”
said Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan
Chase, “and bring more certainty for our
respective shareholders, clients, and the marketplace. We look forward
to a prompt closing and being able to operate as one company.”
“Our Board of Directors believes that the
amended terms provide both significantly greater value to our
shareholders, many of whom are Bear Stearns employees, and enhanced
coverage and certainty for our customers, counterparties, and lenders,”
said Alan Schwartz, President and Chief Executive Officer of Bear
Stearns. “The substantial share issuance to
JPMorgan Chase was a necessary condition to obtain the full set of
amended terms, which in turn, were essential to maintaining Bear Stearns’
financial stability.”
While the rules of the New York Stock Exchange (NYSE) generally require
shareholder approval prior to the issuance of securities that are
convertible into more than 20% of the outstanding shares of a listed
company, the NYSE’s Shareholder Approval
Policy provides an exception in cases where the delay involved in
securing shareholder approval for the issuance would seriously
jeopardize the financial viability of the listed company. In accordance
with the NYSE rule providing that exception, the Audit Committee of Bear
Stearns’ Board of Directors has expressly
approved, and the full Board of Directors has unanimously concurred
with, Bear Stearns’ intended use of the
exception. The closing of the sale of the 95 million shares is expected
to be completed upon the conclusion of a shareholder notice period
required by the NYSE, which is expected to occur on or about April 8,
2008.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services
firm with assets of $1.6 trillion and operations in more than 60
countries. The firm is a leader in investment banking, financial
services for consumers, small business and commercial banking, financial
transaction processing, asset management, and private equity. A
component of the Dow Jones Industrial Average, JPMorgan Chase serves
millions of consumers in the United States and many of the world's most
prominent corporate, institutional and government clients under its
JPMorgan and Chase brands. Information about the firm is available at www.jpmorganchase.com.
The Bear Stearns Companies Inc. (NYSE: BSC) serves governments,
corporations, institutions and individuals worldwide. The company’s
core business lines include institutional equities, fixed income,
investment banking, global clearing services, asset management, and
private client services. For additional information about Bear Stearns,
please visit the firm's website at www.bearstearns.com.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, statements about the
benefits of the merger between J.P. Morgan Chase & Co. and The Bear
Stearns Companies Inc., including future financial and operating
results, the combined company’s plans,
objectives, expectations and intentions and other statements that are
not historical facts. Such statements are based upon the current beliefs
and expectations of J.P. Morgan Chase’s
management and are subject to significant risks and uncertainties.
Actual results may differ from those set forth in the forward-looking
statements.
The following factors, among others, could cause actual results to
differ from those set forth in the forward-looking statements: the
ability to obtain governmental and self-regulatory organization
approvals of the merger on the proposed terms and schedule, and any
changes to regulatory agencies’ outlook on,
responses to and actions and commitments taken in connection with the
merger and the agreements and arrangements related thereto; the extent
and duration of continued economic and market disruptions; adverse
developments in the business and operations of Bear Stearns, including
the loss of client, employee, counterparty and other business
relationships; the failure of Bear Stearns stockholders to approve the
merger; the risk that the businesses will not be integrated
successfully; the risk that the cost savings and any other synergies
from the merger may not be fully realized or may take longer to realize
than expected; disruption from the merger making it more difficult to
maintain business and operational relationships; increased competition
and its effect on pricing, spending, third-party relationships and
revenues; the risk of new and changing regulation in the U.S. and
internationally and the exposure to litigation and/or regulatory
actions. Additional factors that could cause JPMorgan Chase’s
results to differ materially from those described in the forward-looking
statements can be found in the firm’s Annual
Report on Form 10-K for the year ended December 31, 2007, filed with the
Securities and Exchange Commission and available at the Securities and
Exchange Commission’s Internet site (http://www.sec.gov).
Additional Information
In connection with the proposed merger, J.P. Morgan Chase & Co. will
file with the SEC a Registration Statement on Form S-4 that will include
a proxy statement of Bear Stearns that also constitutes a prospectus of
J.P. Morgan Chase & Co. Bear Stearns will mail the proxy
statement/prospectus to its stockholders. J.P. Morgan Chase & Co. and
Bear Stearns urge investors and security holders to read the proxy
statement/prospectus regarding the proposed merger when it becomes
available because it will contain important information. You may obtain
copies of all documents filed with the SEC regarding this transaction,
free of charge, at the SEC’s website (www.sec.gov).
You may also obtain these documents, free of charge, from JPMorgan Chase
& Co.’s website (www.jpmorganchase.com)
under the tab “Investor Relations”
and then under the heading “Financial
Information” then under the item “SEC
Filings.” You may also obtain these
documents, free of charge, from Bear Stearns’s
website (www.bearstearns.com)
under the heading “Investor Relations”
and then under the tab “SEC Filings.”
JPMorgan Chase, Bear Stearns and their respective directors, executive
officers and certain other members of management and employees may be
soliciting proxies from Bear Stearns stockholders in favor of the
merger. Information regarding the persons who may, under the rules of
the SEC, be deemed participants in the solicitation of the Bear Stearns
stockholders in connection with the proposed merger will be set forth in
the proxy statement/prospectus when it is filed with the SEC. You can
find information about JPMorgan Chase’s
executive officers and directors in its definitive proxy statement filed
with the SEC on March 30, 2007. You can find information about Bear
Stearns’s executive officers and directors in
definitive proxy statement filed with the SEC on March 27, 2007. You can
obtain free copies of these documents from JPMorgan Chase and Bear
Stearns using the contact information above.
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