WASHINGTON - Crisis-hit Bear Stearns will be bought by JP Morgan Chase for two dollars a share, company officials said.
JPMorgan Chase announced in a statement is acquiring The Bear Stearns Companies after boards of Directors of both companies unanimously approved the transaction.
"The transaction will be a stock-for-stock exchange. JPMorgan Chase will exchange 0.05473 shares of JPMorgan Chase common stock per one share of Bear Stearns stock. Based on the closing price of March 15, 2008, the transaction would have a value of approximately two dollars per share," the statement said.
"Effective immediately, JPMorgan Chase is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is providing management oversight for its operations," it said.
The deal requires shareholder approval. The sale would be for some 236 million dollars, a tiny fraction of the stock market value of 3.54 billion dollars on Friday.
That after Bear Stearns, among the hardest hit by the collapse of the US subprime, or high-risk, mortgage market, said Friday it was getting an emergency loan from JPMorgan Chase backed by the Federal Reserve after its liquidity position had "significantly deteriorated."
The Fed meanwhile pledged "to provide liquidity as necessary to promote the orderly functioning of the financial system" -- a statement that highlighted concerns about the credit squeeze and its wider impact on the banks.
The Fed has poured hundreds of billions of dollars into the financial system and slashed interest rates by 2.25 percentage points since September to battle the credit crunch that is threatening the US economy with recession.
President George W. Bush last month signed a 168-billion-dollar economic stimulus and the government and banks have introduced a number of initiatives to help homeowners faced with losing their homes amid tightening credit, job cuts and a slowing economy.
mdl/sg
03/17/2008 00:36 GMT