Adds analyst comments
BOSTON (Thomson Financial) - Shares of Bear Stearns Cos. Inc. jumped in
premarket action Monday after the Wall Street Journal reported that JPMorgan
Chase & Co. is near an agreement to quintuple its acquisition offer price to $10
per share.
Bear Stearns shares rose 60%, or $3.59, to $9.55 prior to Monday's open on
volume of 3.4 million. As of Thursday's $5.96 closing price, Bear Stearns stock
was down about 93% year-to-date.
The Wall Street Journal said Bear Stearns' board was meeting Monday morning
and that an announcement was expected after that.
Morgan Stanley analysts said an increase from $2 per share to $10 per share
only modestly lowers the deals contribution to 2008 JPMorgan earnings to 3.7%
from 4.1%.
"If the value of Bear is higher today than last week, we would think the
first recipient of that value would be the Federal Reserve Bank," Morgan Stanley
said. "We expect any new, higher purchase price for Bear Stearns shareholders
would come with at least a reduction, if not an elimination of the need for the
Fed to take on any of Bear Stearns' risky assets." Morgan Stanley maintained its
overweight rating and $37 price target on JPMorgan shares.
On March 16, JPMorgan agreed to acquire the troubled Bear Stearns brokerage
for $2 per share, or 0.05473 shares of JPMorgan common stock.
Shares of JPMorgan slipped 1.2% to $45.42 on volume of 232,000 in premarket
trading.
Greg Saulnier
gs/pc/gs/pc
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