May 29, 2008 7:20 am US/Pacific
Bear Stearns Shareholders Approve JPMorgan Deal
WASHINGTON (AP) ―
-
-
Bear Stearns Cos. shareholders on Thursday approved JPMorgan Chase & Co.'s $2.2 billion buyout of the investment bank whose wagers on subprime mortgages made it the largest corporate casualty of the global credit crisis.
(File)
AP
Bear Stearns Cos. shareholders on Thursday approved JPMorgan Chase & Co.'s $2.2 billion buyout of the investment bank whose wagers on subprime mortgages made it the largest corporate casualty of the global credit crisis.
The widely anticipated "yes" vote at Bear Stearns' midtown Manhattan headquarters means the company will officially become part of JPMorgan Chase by Friday. JPMorgan Chase confirmed that Bear Stearns' shareholders approved the deal, and said it would release the vote tally later.
The bank is buying Bear Stearns for about $10 a share. Back in January 2007, before mortgage defaults began clobbering banks and draining demand from the debt markets, Bear Stearns had traded at $171 a share.
The meeting began at 10 a.m. and lasted less than 10 minutes. Some shareholders said afterward they were angered by the speed at which the deal was approved.
"They were up there drinking coffee paid with my money ... and we lost our money overnight," said Hannah Horgan, a Bear Stearns shareholder. "I have nothing left, and they were so calm."
Arthur Ulrich, another shareholder, said he was fixated during the meeting on the faces of Bear Stearns' outgoing management. He said longtime chairman and former CEO James Cayne "looked rather disheveled."
"He said he was sorry for what happened, but did not apologize for his actions," Ulrich said. "He said (Bear Stearns management) ran into a hurricane, and not to believe what you see in the press."
Bear Stearns' troubles can be traced back to last June, when two of its hedge funds collapsed. Those fund casualties not only foreshadowed the investment bank's own demise, but also effectively launched the recent credit crisis by showing how much damage the slumping mortgage market could incur on the companies that bought, repackaged and sold the loans.
The deal's approval comes as no surprise - since offering to take over the firm two-and-a-half months ago at the behest of the U.S. government, JPMorgan Chase & Co. has purchased nearly half of Bear Stearns Cos. stock, virtually guaranteeing shareholder approval. JPMorgan also upped its initial offer of $2-a-share to $10-a-share after outcry from Bear Stearns shareholders, many of whom are employees that JPMorgan intends to keep on staff.
But just as the world's financial system has far to go in recovering from bad bets on debt, so does JPMorgan in its integration of Bear Stearns. The process will not only involve taking on Bear Stearns' distressed securities, but also effectively managing the approximately 7,000 Bear Stearns employees coming aboard and retaining the clients of what was the nation's fifth-largest investment bank.
"Doing the deal is the easiest part," said John Koob, who works in mergers, acquisitions and restructuring at Towers Perrin. "When the champagne cork pops, the real work now begins."
(© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
CBS News Timeline: Bear Stearns Debacle
Click to enlarge
Stumble It!
Comments