Ashish S

Explaining Bear Stearns' Current $7 Price

Shareholders will almost certainly reject this offer. On Monday morning, while all other financials hit the tank, JPM added $10b to its market cap, suggesting that BSC was worth AT LEAST $10b to JPM (and therefore likely other banks without liquidity problems). However, now that markets have somewhat stabilized, BSC is no longer today in the same position as it was on Sunday night. Therefore, BSC's counterparties are going to now be more comfortable with their risk and have had time to hedge. Shareholders reject the deal and bear is at least a $2b company by week's end.