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Bear Stearns to be bought at $10/share now?
Oh Gees.

JPMorgan May Raise Bid for Bear Stearns, NYT Says
http://www.bloomberg.com/apps/news?pid=20601087&sid=auCiXqvdA3Ck&refer=home

By Bill Austin and Joseph Galante

March 24 (Bloomberg) -- JPMorgan Chase & Co. may quintuple its takeover offer for Bear Stearns Cos. to more than $1 billion in an effort to win support from employees and shareholders opposed to the deal, the New York Times said.

JPMorgan is in talks to raise its all-stock bid to $10 a share from $2, the Times said, citing unnamed people involved in the negotiations. The Federal Reserve, which helped engineer the takeover after customer withdrawals crippled the New York-based firm, is uncomfortable with any plan that might be perceived as an investor bailout, the report said.

The original bid, more than 90 percent lower than the securities firm's market value at the start of the month, drew opposition from shareholders led by U.K. billionaire Joseph Lewis. JPMorgan Chief Executive Officer Jamie Dimon met with Bear Stearns employees, who own a third of the company, to seek their support last week.

``If you are seeing stock values overall recover, then it would seem that because of the timing, Bear Stearns shareholders got a very raw deal,'' said Jay Moghe, who helps manage $160 million as the Singapore-based head of Opes Prime Asset Management Pte. ``It would look quite embarrassing to the Fed now if the situation results in there being a bidder at a higher price, seeing as they have underwritten the deal at $2.''

Bear Stearns is also considering selling JPMorgan a 39.5 percent stake, which wouldn't require shareholder approval, to help expedite the takeover, the Times said.

Calls by Bloomberg News to the mobile phones of Bear Stearns spokesman Russell Sherman and JPMorgan spokesman Joseph Evangelisti, both based in New York, weren't immediately returned.

Fed's $30 Billion

Bear Stearns climbed 12 percent to $5.96 on March 20 in New York on speculation JPMorgan, the third-largest U.S. bank, might raise its bid or risk prompting rival offers.

The stock, which peaked at $171.51 last year, closed at $30 two days before Chief Executive Officer Alan Schwartz, 58, was forced to accept JPMorgan's terms or face bankruptcy after customers and lenders abandoned the broker. The Fed agreed to provide as much as $30 billion to JPMorgan to get the deal done.

Lewis and James ``Jimmy'' Cayne, Bear Stearns's 74-year-old former chief executive officer, are trying to recruit investors to counter JPMorgan's offer, the New York Post reported last week, citing people familiar with the situation.

The two have approached private equity firms including J.C. Flowers & Co. and Kohlberg Kravis Roberts & Co.; banks including Barclays Plc, HSBC Holdings Plc, Credit Suisse Group and Royal Bank of Scotland Group Plc; sovereign wealth funds and China's Citic Securities Co., according to the Post.

Merger Agreement

JPMorgan may be required to guarantee Bear's trades even if shareholders vote down the takeover and seek another bidder, because of a sentence ``inadvertently included'' in the merger agreement, the Times said, citing a person briefed on the talks.

Bear Stearns employees, directors and lawyers are prohibited from seeking an alternative transaction, according to the agreement, which was filed with regulators last week.

Bear's financial troubles began in July, when two hedge funds that invested in securities tied to U.S. subprime mortgages collapsed. The firm, once the biggest underwriter of U.S. mortgage bonds, had to bail out the funds and take possession of many of the instruments.