JPMorgan Chase last night agreed to buy Bear Stearns, the stricken US investment bank, for around $230m (£114m) in shares in a deal that puts an end to Bear’s 85 years of independence and highlights the risks faced by banks during the credit crunch. Financial Times, The Times
JPMorgan’s cut-price takeover of Bear, which has the backing of the Federal Reserve and the Treasury, was agreed before the opening of Asian markets this morning in an attempt to stave off a run on other banks.
However, the deal, which values Bear at just $2 per share, compared with the $169 hit in January last year and the $30 reached on Friday, will wipe out most of the value of the investments of Bear’s shareholders, including its senior management.
JPMorgan said that in addition to the emergency loans extended to Bear on Friday, the Fed had agreed to fund up to $30bn of Bear’s less liquid assets.