JPMorgan Chase & Co. today revised its offer for Bear Stearns Cos. in a stock deal that quintupled the banks initial offer to $10 a share for the troubled Wall Street firm.
JPMorgan first announced on March 16 its offer of 0.05473 JPMorgan shares for each Bear Stearns share, or $2.
Bear Stearns employees and investors had criticized the low offer for a firm that was valued at as much as $159.36 a share on April 25, 2007, its 52-week high. Several law firms have filed lawsuits, alleging breach of fiduciary duty by Bear Stearns board and asking for an investigation of the merger talks process.
Under the revised terms, each share of Bear Stearns common stock would be exchanged for 0.21753 shares of JPMorgan Chase common stock, reflecting an implied value of approximately $10 per share of Bear Stearns common stock based on the closing price of JPMorgan Chase common stock on the New York Stock Exchange on March 20, the firm said in a statement. JPMorgan also agreed to buy 95 million new Bear Stearns shares, or 39.5% of the outstanding Bear Stearns stock, at the same price of 0.21753 JPMorgan share, by April 8, under the revised offer.
The bank said it will bear the first $1 billion of potential losses associated with Bear Stearns, while the New York Fed will fund the remaining $29 billion. The Fed had pledged a total of $30 billion under a special financing agreement to rescue the Wall Street firm.