Bear Stearns - It's All Over
With China's CITIC Securities understandably backing away from injecting that much-needed $1bn in capital (the Chinese firm said that it was conducting 'an overall evaluation' of the proposed deal in the light of the developments last week), the race was on to find a buyer for Bear, as the firm was unlikely to have been able to open its doors Monday without one. The lights were on at Bear's New York offices all weekend, as firm executives and their advisers (Lazard) tried to thrash out a deal with JPMorgan. Unless the deal was done quickly, Bear was likely to have had to file for bankruptcy.
From the moment that JPMorgan stepped in to bail Bear out Friday, the bank was in prime position to take over its smaller rival. It remains to be seen, however, exactly what JPMorgan will do with its new acquisition. CEO Jamie Dimon, always a man with a keen eye for a bargain, probably won't want all of Bear Stearns. Although the firm's prime brokerage unit will be a valuable acquisition, the M&A unit (such as it is) will be of no interest. Dimon also already thinks he has far too many traders. High on JPMorgan's wish-list, however, was said to be Bear's HQ building, much better than its own bank's close-by equivalent.
Lazard was also said to have been busy over the weekend, trying to attract the likes of Barclays, HSBC and Royal Bank of Scotland into the fray. A deal with HSBC was probably the most attractive for Bear staff, as there was unlikely to have been much overlap in terms of jobs. In the end, though, it was a time thing, and JPMorgan was the only logical buyer. Now the fun starts, as Dimon works out what to do next with his new toy.