JPMorgan Chase & Co (JPM.N) said on
Saturday it completed its $1.4 billion Bear Stearns Cos (BSC.N)
takeover, capping the demise of a Wall Street firm that
survived the Depression and numerous slumps in its 85 years but
could not navigate the mortgage crisis.
Weakened by its massive exposure to mortgage markets and
the embarrassing blow-up of two of its hedge funds, Bear was
driven to the brink of bankruptcy in March by traders who
drained about $17 billion of the firm's cash in a matter of
Federal officials, worried a Bear bankruptcy would drag the
rest of the markets down with it, strong-armed the bank to
accept JPMorgan's $2-a-share offer, backed by a Federal Reserve
bailout of $30 billion in Bear assets.
A week later JPMorgan raised its offer five-fold to 0.21753
of a share for each Bear share. Based on JPMorgan's current
market price of $43, that bid valued Bear at $9.35 a share,
well below the $57 those shares fetched before traders began
their run on Bear.
In exchange for the higher price, Bear had to sell a 39.9
percent stake to JPMorgan. Combined with other purchases,
JPMorgan amassed a controlling 49.5 percent stake and
effectively locked up Bear for good.
Since then, JPMorgan, which under CEO Jamie Dimon largely
steered clear of credit losses that hobbled its rivals last
year, has been sorting through Bear's people and assets.
For a fire-sale price, JPMorgan will gain a new
headquarters tower in Midtown Manhattan, some of Wall Street's
largest clearing, prime brokerage and energy trading arms.
Bear's name will survive on Wall Street through its retail
brokerage business, which Morgan is keeping.
The deal dealt a crushing blow to Bear employees, who
collectively held 33 percent of the firm's stock and saw
billions of dollars in their personal wealth wiped out.
Only 6,500 staffers were offered jobs, casting about 7,000
analysts, bankers and traders into the streets at a time when
the rest of Wall Street is shrinking.
JPMorgan now faces many significant and some unknown risks.
Dimon disclosed this month that the cost of shedding Bear
assets, litigation expenses and other merger-related costs
would soar to $9 billion from an earlier rough guess of $6
As a result, JPMorgan expected to record a second-quarter
gain of $1 billion, though it is expanding during a period that
Dimon worries could be a prolonged recession.
The U.S. commodity markets' chief
regulator will unveil policy changes next week meant to address
public and political concerns that market malfunctions may be
contributing to rising food and energy prices, The New York
Times reported on Saturday.
Citing people who have been briefed about the agency's
plans, the Times said that the new measures would be announced
by the Commodity Futures Trading Commission, which oversees
exchanges central to the establishment of prices for
commodities ranging from corn to crude oil worldwide.
Facing mounting political pressure and farm industry
demands, the CFTC is expected to outline measures to address
the role played by new financial investors in the futures
markets, the Times said, in particular those who invest through
commodity index funds, which have grown from a $13 billion
stake in 2003 to some $250 billion this year, it said.
Index funds differ from traditional commodity investors in
that they do not sell commodity futures, but only buy them, the
Times said. Critics say this has helped drive up commodity
But the newspaper said the new steps may fall short of
sweeping measures sought by the index funds' critics. The
people who spoke of the new measures discussed them on
condition of anonymity because the plans are not yet finalized.
(Writing by Christopher Michaud; editing by Patricia
India's Sterlite Industries
of bankrupt copper miner Asarco for $2.6 billion, the latest in
the series of overseas acquisitions by Indian firms.
Tuscon-based Asarco, the third largest copper maker in U.S.
had total revenue of $1.9 billion in 2007, Sterlite, a unit of
Vedanta Resources Plc (VED.L) said in a statement.
"Asarco is a strategic fit with Sterlite's existing copper
business," the Indian firm said in the statement.
On Friday a lawyer close to the deal had told Reuters in
New York that Vedanta had signed a $2.6 billion deal to buy the
assets of Asarco.
Asarco, formerly known as American Smelting and Refining
Co, produced 235,000 tons of refined copper in 2007 and its
mines have an estimated reserve of 5 million tons of contained
It filed for bankruptcy protection in 2005 after it was
sued for $1 billion over environmental and asbestos claim.
Sterlite, is India's top non-ferrous metals and mining firm
with interests in aluminum, copper, zinc and lead.
The deal, subject to the approval of a U.S. Bankruptcy
Court, will be funded through a mix of debt and existing cash,
Last June, it had raised $1.75 billion in American
depositary shares to pay for possible acquisitions and cut
Indian firms coming of years of strong profitable growth
and clean balance sheets that aid easy access to capital have
been snapping up overseas firms to expand their presence
Cellular firm Reliance Communications Ltd (
started talks with South Africa's MTN (MTN.J) that could
culminate in the creation of a $66 billion telecom group.
Tata Steel (
takeover to date, a $13 billion purchase of Anglo-Dutch steel
maker Corus Group and aluminum maker Hindalco Industries
Tata Motors (
Land Rover Brands from Ford Motor Co (F.N) for $2.3 billion.
Indian firm have announced outbound merger and acquisition
deals worth $7.1 billion so far in 2008, Thomson Reuters data
ABN AMRO advised Sterlite and it was Lehman Brothers
(LEH.N) for Asarco, the statement said.
Shares in Sterlite, which has a market value of $15.6
billion, ended 2.8 percent down at 934.90 rupees on Friday in a
firm Mumbai market.
(Reporting by Narayanan Somasundaram, Nidhi Verma and
Devidutta Tripathy; Editing by Louise Heavens)