March 17th, 2008

Bear Stearns goes to J. P. Morgan Chase for $2 a share.

For reference, it closed on Friday at $30.

Bloomberg reports:
"[T]he price JPMorgan is paying is about one quarter the value of the securities firm's headquarters building in midtown Manhattan. The 1.2 million-square-foot, 45-story structure built in 2001 is worth about $1.2 billion". says:
"Said another way, Bear's headquarters building, which was included in the sale, is worth four times what JP Morgan paid for the entire firm. That means Bear, as an ongoing entity, was a liability as of Sunday. This is not surprising considering the rush for the exits by customers in the last few weeks and the loss-ridden portfolio of securities on Bear's books. Add the possibility of lawsuits against Bear's actions, and JP Morgan in effect said Bear is a liability in its present form, we will not buy it, but we will take it for $2 per share to help shore up confidence since the Fed has asked us nicely."

"Unfortunately, Bear Stearns is not the only firm to hold large quantities of leveraged securities backed by mortgages."

"If Bear Sterns [sic] went from having a $169 stock in January of 2007 to being virtually worthless today, it makes you wonder what other firms may follow a similar path to insolvency."