NEW YORK (AP) - JPMorgan Chase & Co. on Monday moved to assuage
shareholders of Bear Stearns & Co. by increasing its offer to acquire the ailing
investment bank to $10 per share from the bargain-basement price of $2 per
share.
There was a backlash last week among Bear Stearns shareholders who felt the
original deal undervalued the 85-year-old institution. JPMorgan Chase Chief
Executive Jamie Dimon spent most of the week trying to woo Bear Stearns
employees, who collectively own about a third of the company.
"We believe the amended terms are fair to all sides and reflect the value
and risks of the Bear Stearns franchise," Dimon said in a statement, "and bring
more certainty for our respective shareholders, clients, and the marketplace."
The new deal values Bear Stearns at about $1.19 billion -- still a small
fraction of what the company was worth before its sudden near-collapse earlier
this month. It also includes a provision for JPMorgan to buy 95 million new Bear
Stearns shares immediately, which gives it a 39.5 percent stake in Bear before
shareholders have even voted.
The amended offer was Dimon's attempt to ward off any competition, and
quickly move on with the acquisition. The two sides also amended certain
guarantees JPMorgan made related to Bear Stearns' positions, though details of
those amendments were not immediately clear.
The Federal Reserve Bank of New York's $30 billion special financing linked
to the transaction has also been amended so that JPMorgan will take on the first
$1 billion of any losses suffered by Bear Stearns. There was no immediate
comment from the Federal Reserve.
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