By Lisa Kerner
Charlotte, N.C., March 17 - JPMorgan Chase & Co. will acquire Bear Stearns Cos., Inc. in a stock-for-stock exchange valued at $2 per share, the companies announced on Sunday.
Effective immediately, JPMorgan Chase is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is overseeing its operations, according to a JPMorgan news release.
JPMorgan Chase will exchange 0.05473 shares of its common stock for each share of Bear Stearns stock in a deal reportedly valued at more than $236 million.
Bear Stearns stock (NYSE: BSC) closed at $30 on Friday.
The Federal Reserve agreed to provide special financing in connection with the deal, funding up to $30 billion of Bear Stearns' less liquid assets. The financing is in addition to what the Federal Reserve provides through its Discount Window, the release stated.
Both companies' boards of directors have unanimously approved the transaction, which remains subject to shareholder approval.
The acquisition is slated to close by the end of the second quarter, with approvals already obtained from federal agencies including the Federal Reserve and the Office of the Comptroller of the Currency.
"This transaction will provide good long-term value for JPMorgan Chase shareholders," JPMorgan chairman and chief executive officer Jamie Dimon said it the release.
"This acquisition meets our key criteria: we are taking reasonable risk, we have built in an appropriate margin for error, it strengthens our business, and we have a clear ability to execute," Dimon added.
JPMorgan is a New York financial services firm with assets of $1.6 trillion and operations in more than 60 countries.
Bear Stearns is an investment banking, securities and derivatives trading, and clearance and brokerage company based in New York.
| Acquirer: | JPMorgan Chase & Co.
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| Target: | Bear Stearns Cos., Inc.
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| Announcement date: | March 16
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| Transaction total: | $236 million
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| Price per share: | 0.05473 shares of JPMorgan common stock for each share of Bear Stearns stock, or $2.00 per share
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| Expected closing: | Second quarter of 2008
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| Stock price for acquirer: | NYSE: JPM: $36.54 on March 14
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| Stock price of target: | NYSE: BSC: $30.00 on March 14
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