Bear Stearns (fka BSC)

[IRISHBULL]

JPMorgan Will Pay About $65 per Share for Bear Stearns

http://www.foxbusiness.com/article/analyst-jpmorgan-pay-65-share-bear-stearns_530376_1.html
JPMorgan Chase & Co. (JPM: 46.55, +0.58, +1.26%) will end up paying about $65 per share for Bear Stearns Companies Inc., too high a price for a "deeply troubled company," a Punk, Ziegel & Co. analyst said Tuesday.

Analyst Richard X. Bove's comments came after JPMorgan Chase raised its per-share bid to $10 -- or about $1.47 billion -- from $2. But Bove noted the investment bank will spend just under $1 billion to buy an additional 39.5 million Bear Stearns shares by April 8, and will absorb the first $1 billion in losses from Bear Stearns' portfolio.

While the total initial costs are about $3.44 billion, JPMorgan Chase will likely record a 12-month loss of $6 billion to unite the two companies, bringing the final per-share price to about $65 per share, he said.
Bear Stearns' stock opened trading on March 12 at $65.60.

While some may think that JPMorgan is getting Bear Stearns at a bargain price, "I do not," Bove said in a note to clients. "Bear Stearns is a deeply troubled company which would have no value if the Federal Reserve had not stepped in to bail it out."

JPMorgan does not need Bear Stearns mortgage operation, has a "much stronger investment banking business," and the Bear Stearns New York headquarters is "just another piece of Manhattan real estate that it must rid itself of," Bove said.

While JPMorgan Chase may want Bear Stearns' prime brokerage business, it is likely that the unit's best customers have already left for Goldman Sachs, he said.

Bove currently has a "Market Perform" rating and $44 price target on JPMorgan Chase. The target implies he expects shares to drop about 6% over Monday's $46.55 close.

"What is most disturbing about this deal is that it uses a great deal of Morgan capital to buy a company that is losing market share, in a series of businesses that are declining in size, with a top management team that is best described as sclerotic," he said.

JPMorgan Chase shares fell 30 cents to $46.25, and shares of Bear Stearns rose 34 cents, or 3%, to $11.59 in premarket trading Tuesday. They closed at $46.55 and $11.25 respectively on Monday.