Bear Stearns: from $70 to $2 in a week
New York Times
Bear Stearns, pushed to the brink of bankruptcy by what amounted to a run on the bank, agreed late Sunday to sell itself to JPMorgan Chase for a mere $2 a share, narrowly averting a collapse that threatened to cascade through the financial system.Graphic.
The price represents a startling 93 percent discount to Bear Stearns’ closing stock price on Friday on the New York Stock Exchange.
For JPMorgan, one of the few major banks to emerge relatively unscathed from the subprime mortgage crisis, the deal provides a major entry to prime brokerage, which provides financing to hedge funds, a source of enormous growth over the past decade, but a slowing business amid the market’s turndown.
Bear Stearns would also give JPMorgan a much bigger presence in the mortgage securities business, which the bank executives say they are committed in spite of them recent market downturn.