Bear mauled by JPM & Co.

The more I think about it the angrier I get (if I were a Bear Stearns shareholder).  Forced into a firesale, Bear executives sold the firm for a reported $2 per share last weekend.  And that came on the heals of Bear estimating that firm’s book value being worth at least $80 per share.  Now that’s a serious disconnect.  My first question: Mr. Dimon (JPM CEO), could you do us all a favor and reconcile the $72 difference?

My next question: why didn’t the Fed allow other firms to potentially bid for the firm.  I’m sure with all the firepower and deep pockets that Goldman has, they would have submitted an offer.  Instead they allowed JPM to do a deal with virtually no downside risk (to the extent that the Fed would allow for emergency funding) plus the option to purchase the $1.2 billion Bear building if shareholders are to vote down the deal.      

And with such a terrible offer comes a new set of problems.  The New York Times reported in Wednesday’s business edition a new showdown commencing:  a battle between bondholders and shareholders.  One side wanting the deal to go through as to secure the assets from bankruptcy proceeding (bondholders) while the other side wants to breathe life into the equity side of the balance sheet (equity holders).  All while each side trying to buy up as many shares as possible in order to increase their voting power for the upcoming shareholders meeting. 

If you can't tell, count me as one "against" the deal.  In fact, I may buy shares in the open market in the next couple of weeks to get in on the vote.

Stay tuned.