JP Morgan Chase to acquire Bears Stearns

JPMorgan Chase announced today that it will acquire the investment bank Bears Stearns in an transaction for stock to stock exchange. On the basis of the closing stock price of March 15th, 2008 the value per share comes to merge $2.00 . Based on a report from BBC business site, Bears Stearns had a sub-prime loss of US$3.2 bn and lately JP Morgan Chase with the backing from Federal Bank of New York was to provide some emergency funds.

Another article on BBC says that Bears Stearns is(was?) the Wall Street's fifth largest investment bank and there where speculations that it was finding hard to come up with funds for its daily operations. The shares dropped 46% on Friday (March 14th, 2008) on the news that the banks is driven to insolvency by the hedge funds clients.

Looking back to my post i wrote on February 28th,2008 about the grim banking forecast, it looks like the reality of banks facing the sub-prime mess is hitting close to home.