Tuesday, March 18, 2008

Bear Stearns: 'A Case for a Better Deal?' (BSC)

From the Wall Street Journal:

Clever Argument for Recovery
Could Get J.P. Morgan to Pay
Higher Price for Bear Stearns

Don't fight City Hall, they say, or in the case of Bear Stearns, the Federal Reserve. The firm also probably isn't wise to tick off its savior, J.P. Morgan Chase. But Bear's shareholders have little to lose by cleverly pushing for more than the $2-a-share they have been offered.

Joseph Lewis, Bear's second-largest shareholder, already has called the offer derisory. It isn't hard to see his point: The stock closed Friday around $30 a share, and executives stated its book value, or assets minus liabilities, was still in the region of $80.

That may be a stretch now, so let's slap a 10% discount on it, making $72 a share. And J.P. Morgan certainly deserves a buffer against any future losses for picking up Bear's books, first, for the myriad transaction-related costs that the bank reckons could be as much as $6 billion. That would lop an additional $51 a share off book value....MORE