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JPMorgan to buy Bear for $2 a share

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JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 17:50
Guess what's going to happen to global and US stock markets tomorrow...

http://news.yahoo.com/s/ap/jpmorgan_bear_stearns
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 17:51
Its already started in Australia 2.5% down at lunchtime.
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 18:19
ah, companies getting federal bail-outs, not taking responsibility for their own actions, clearly being enabled through corporate welfare....
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 19:01
What's going to happen to those who just got post-grad and intern positions at Bear?
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 19:06
What's going to happen for us '10 grads who will have one less employer :(
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 19:13
We'll be lucky if it stays as just "one" less employer...especially for internationals...

bsd_lover wrote:
What's going to happen for us '10 grads who will have one less employer :(
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 19:25
Unfortunately, the bleeding won't stop at one. My bet is that Lehman is next...
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 19:50
This isn't really a federal bail-out. They are selling for about 3% of what the stock was trading at 2 days ago. This is essentially a liquidation, with JP Morgan assuming the liabilities of Bear. JP has a lot at stake because they did a lot of business with Bear, but this deal does provide some sense of stability to the market as a whole.

I'll be very interested to speak with people who accepted offers from Bear. If they get to work at the new combined company, that's very fortunate for them. JP Morgan was a very popular choice this past fall and a top choice for many seeking banking internships, while Bear was already showing signs of trouble and top candidates were shying away (not to mention Bear's reputation wasn't as strong in general). My guess is that they will honor many of the internship offers, and Bear may run their own internship for the summer separately from JP because they companies just won't be that integrated yet, but that it will be very difficult for Bear summers to secure full time offers. JP has little interest in Bear's investment banking arm (they want the prime brokerage and the private bank) and I'd definitely bet on huge cuts in those divisions.

As to whether Lehman will be next, they are in a substantially different position that Bear. The WSJ journal published an article yesterday describing Lehman's (and Goldman, Morgan and Merrill's ) cash and collateral positions, and they are well positioned to meet their obligations (reserves covering at least 18 months of debt payments). Lehman also issued a new $2B 3 year debt offering that was substantially oversubscribed. Given the current environment, the financing is considered long term (heck 28 days is considered long term right now) and it shores up Lehman's balance sheet. Also, Lehman, along with Goldman had the smallest subprime related write downs at $1.5B. Lehman stock was negatively affected by the Bear news on Friday, otherwise I think they would have been in the mix to buy Bear (they've been a rumored buyer for some time).

All of the investment banks have some level of risk, given the current credit markets, but things would have to deteriorate much much more for Lehman to be in the same type of trouble as Bear. Bear's market cap was in the neighborhood of $6B 2 days ago, then dropped to $3.5B on Friday. They are being sold for $230M. Lehman's market cap is about $21B even after the drop on Friday. I think they really are 'too big to fail' (a phrase with a lot of history in the banking world) and that the Federal government will be stepping in all over the place before Lehman is in danger of liquidating.
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 19:59
SkiC wrote:
Unfortunately, the bleeding won't stop at one. My bet is that Lehman is next...


Actually, Lehman is Goldman-lite. I'd keep my eyes on Merrill, for now.
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 16 Mar 2008, 21:13
Would definitely agree with that. As we interacted with firms this past fall, Bear and Merrill seemed to be having the most difficulty while JP and Lehman seemed to be the strongest (and most popular). Goldman was a total outlier compared with other banks. Things have changed since then, and mono-line investment banks have been hurt by the credit crisis a lot more than banks with diversified businesses, but there are a lot of other organizations out there (banks and other related businesses) in much worse shape than Lehman.

But, things are changing quickly.
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 17 Mar 2008, 04:17
pelihu wrote:
If they get to work at the new combined company, that's very fortunate for them.



They are very very lucky if they get to work at JP. Jamie Dimon is known to be a hard-nosed slicer and dicer. One of the reasons why JP has acquired companies so efficiently and a reason why they are hanging tough in this crunch.
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 17 Mar 2008, 11:23
The market is actually up now :)
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 17 Mar 2008, 12:01
I also read that JP was going to lay some people off before the whole buyout of Bear Stearns. So how does this affect future B school grads? Or which sections are they reducing? And is this only the beginning or is it bottoming out?
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 17 Mar 2008, 15:42
The word is that JP Morgan will lay off a huge chunk of Bear Stearns employees. Not a surprise really, all things considered; JP is only interested in a tiny part of Bear (and the value of the real estate).

I take heart in the fact that financial stocks bounced back from midday lows; I think (and hope) this means that the smart money on the street believes that financials are on solid footing and were oversold. Tomorrow is a big day because Goldman, Morgan and Lehman will all be releasing their quarterly numbers. Given current accounting rules, any hidden bad news should come out then. If more bad news comes out, it's anyone's guess what will happen; if everything is solid, I think the beaten down stocks could bounce back sharply.
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Can you sing along? [#permalink] New post 20 Mar 2008, 03:43
"Is this the real price?

Is this just fantasy?

Financial landslide

No escape from reality

Open your eyes

And look at your buys and see.

I'm now a poor boy

High-yielding casualty

Because I bought it high, watched it blow, Rating high, value low Any way the Fed goes Doesn't really matter to me, to me

Mama - just killed my fund

Quoted CDO's instead

Pulled the trigger, now it's dead

Mama - I had just begun

These CDO's have blown it all away

Mama - oooh

I still wanna buy

I sometimes wish I'd never left Goldman at all.

I see a little silhouette of a Fed

Bernanke! Bernanke! Can you save the whole market?

Monolines and munis - very very frightening me!

Super senior, super senior

Super senior CDO - magnifico

I'm long of subprime, nobody loves me

He's long of subprime CDO fantasy

Spare the margin call you monstrous PB!

Easy come easy go, will you let me go?

Peloton! No - we will not let you go - let him go Peloton! We will not let you go - let him go Peloton! We will not let you go - let me go Will not let you go

- let me go (never) Never let you go - let me go Never let me go - ooo

No, no, no, no, no, no, no, -

Oh mama mia, mama mia, mama mia let me go S&P had the devil put aside for me For me, for me, for me

So you think you can fund me and spit in my eye?

And then margin call me and leave me to die Oh PB - can't do this to me PB Just gotta get out - just gotta get right outta here

Ooh yeah, ooh yeah

No price really matters

No liquidity

Nothing really matters - no price really matters to me

Any way the Fed goes....."
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Re: JPMorgan to buy Bear for $2 a share [#permalink] New post 20 Mar 2008, 05:31
I know that this is mean, but the jokes on the market included this one:

Crude Reality:
"LA Galaxy paid more to Mr. Beckham than JP Morgan paid to Bear Stearns..."
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Re: Can you sing along? [#permalink] New post 26 Mar 2008, 08:17
kwam wrote:
"Is this the real price?

......

Any way the Fed goes....."


kwam - this is so awesome. Did you adapt it? Someone needs to record it :)
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Re: Can you sing along? [#permalink] New post 30 Mar 2008, 15:39
svrider wrote:
kwam wrote:
"Is this the real price?

......

Any way the Fed goes....."


kwam - this is so awesome. Did you adapt it? Someone needs to record it :)


Although Queen is one of my favorite bands, no I didn't, that's the way I received. Almost every week I receive many of this jokes...

It's something to keep spirits up in this kind of envorinment :wink: .
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Re: Can you sing along?   [#permalink] 30 Mar 2008, 15:39
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