JPMorgan Chase & Co. is acquiring The Bear Stearns Companies Inc. in a stock-for-stock exchange. The boards of directors of both companies have unanimously approved the transaction, the firms add.
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, the transaction would have a value of approximately $2 per share.
Effective immediately, JPMorgan Chase is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is providing management oversight for its operations. Other than shareholder approval, the closing is not subject to any material conditions and is expected to have an expedited close by the end of the calendar second quarter 2008.
In addition to the financing the Federal Reserve ordinarily provides through its discount window, the Fed will provide special financing in connection with this transaction. According to JPMorgan Chase, the Fed has agreed to fund up to $30 billion of Bear Stearns' less liquid assets.
‘The past week has been an incredibly difficult time for Bear Stearns. This transaction represents the best outcome for all of our constituencies based upon the current circumstances,’ states Alan Schwartz, president and CEO of Bear Stearns. ‘I am incredibly proud of our employees and believe they will continue to add tremendous value to the new enterprise.’