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JP Morgan Rolls the Fed of New York (and BSC)

Analyst: Deal could have J.P Morgan pay $65/share for Bear

By Riley McDermid
Last update: 9:34 a.m. EDT March 25, 2008Print RSS Disable Live Quotes

NEW YORK (MarketWatch) - J.P. Morgan Chase's (JPM:JPMorgan Chase & Co
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Last: 45.36-1.19-2.56%

11:43am 03/25/2008

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JPM 45.36, -1.19, -2.6%) increased bid of $10 a share for troubled brokerage Bear Stearns Co. works out to the bank paying about $65 a share after all costs and debt is absorbed, Punk Ziegel analyst Dick Bove wrote in a research note Tuesday. Bove said the total transaction cost of $3.44 billion added to the original Bear shares offered and the 12-month loss of $6 billion J.P Morgan will pay to combine the two companies, plus the purchase price, will have the bank paying around $65 per original Bear share. "This is approximately the same as Bear Stearns opening price on March 12," Bove said, making it no bargain for J.P. Morgan investors. "Investors believe that J.P. Morgan is underbidding for Bear Stearns and getting it at a bargain price. I do not," Bove said. "Bear Stearns is a deeply troubled company which would have no value if the Federal Reserve had not stepped in to bail it out."