Revised Bear Stearns deal prompted a big advance in today’s trading session, lifting all major averages to green territories and contributing to substantial gains for the entire market.
JPMorgan confirmed a New York Times report that the company will boost its offer to $10 a share from $2.
The new deal values Bear Stearns at about $1.19 billion — still a fraction of what the company was worth before its sudden near-collapse earlier this month. It also includes a provision for JPMorgan to buy 95 million new Bear Stearns shares immediately, which gives it a 39.5 percent stake in the company before shareholders have even voted.
The revised plan, according to AP – is clearly aimed at diffusing a backlash among Bear Stearns shareholders who felt the original deal undervalued the 85-year-old institution. Bear Stearn was one of the most well-respected and well-established names on Wall Street prior to near-collapse.
JPMorgan Chase Chief Executive Jamie Dimon spent most of the week trying to woo Bear Stearns employees, who collectively own about a third of the company.
The company’s 14,000 employees — most of whom depended on Bear Stearns’ stock as part of their retirement plans — are facing significant job cuts if the deal goes through.
The revised deal is still the target of shareholder lawsuits.
Bear Stearns shares jumped over $7 in today’s trading, to $13.85, while JPMorgan rose more than $2 for the day, to $48.16.