JPMorgan (JPM) Ups Offer for Bear Stearns (BSC)
JPMorgan (JPM) is increasing the amount of the offer it made last week to purchase Bear Stearns (BSC). Originally JPM offered $2 a share for BSC stock. After last week’s rally by the financial sector, though, and the fact that many BSC stockholders vowed to fight the deal, things have changed and are now moving in a different direction. The New York Times reports on the new arrangement between JPMorgan and Bear Stearns:
In Monday’s statement, the banks said that the directors of both companies had approved the amended agreement and the purchase agreement. In addition, Bear’s directors have indicated that they intend to vote their shares — worth almost 5 percent cent of Bear’s shares after the dilution of issuing shares for JPMorgan — giving JPMorgan nearly 45 percent of the vote and a virtual guarantee that the deal will be approved by shareholders.
While this move will probably placate shareholders, it still remains to be seen whether this will help the economy. After all, reports BloggingStocks, the New York City economy has become rather dependent on Wall Street, and in some cases the New York City economy’s problems may drag the rest of America down. Peter Cohan points this out about the current situation on Blogging Stocks:
I don’t know whether the U.S. government has enough money to bail out all those bogus bets. So while New Yorkers will see the value of their real estate decline, the U.S. could end up going into the financial tank trying to bail out the industry that employed a third of them.
I agree that an awful lot is being done on behalf of investment banks. Unfortunately, much of it is being done with taxpayer dollars. Ultimately, would a recession really hurt most “regular” Americans? And would it force our financial sector to re-assess the ways it’s been doing things? We may never know, since the Fed seems bent on making sure that Wall Street gets the cushion it needs. Let’s just hope it doesn’t cost us too much.
What do you think of the way the economy is going?
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional.
Tags: BloggingStocks, JPMorgan Bear Stearns, investing banks, stock investing blog,
JPMorgan (JPM), Bear Stearns (BSC), Fed recession economy
June 6th, 2008 at 10:12 pm
[…] will be further on the hook. After all, reasons Clinton, if taxpayers are the hook for the recent JPMorgan bailout of Bear Stearns, and other moves, they might as well pay for something for which some of them receive a direct […]