JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. for $240 million, about 90 percent less than its value last week, after a run on the company ended 85 years of independence for Wall Street's fifth-largest securities firm.
Shareholders of Bear Stearns will get stock in JPMorgan equivalent to about $2 a share, compared with $30 at the close on March 14, the New York-based companies said in a statement late yesterday. The Federal Reserve is providing financial backing to JPMorgan, the second-biggest U.S. bank, and also cut the rate on direct loans to banks in its first emergency weekend action in almost three decades to stave off a broader market panic.
The Fed also moved in with a rare weekend move and dropped the emergency lending rate a quarter of a point.
President Bush also weighed in predicting a turnaround.
President Bush rushed to strike a note of calm to the turbulent situation on Monday morning, hailing the Fed's action and saying: "We've taken strong decisive action." The president spoke after meeting at the White House with Treasury Secretary Henry Paulson and other members of his economic team. "We're in challenging times," Bush said.
Despite all the action to help prevent losses stocks are still in negative territory again today. The Financial Timessays investors are waiting for the next domino to fall.
JP Morgan Chase has snatched up Bear Sterns in a rapid transaction for a huge discount of $2 a share. 