Karried
03-17-2008, 06:56 PM
Can you even imagine how sick these poor people must feel tonight???
"One of the more stunning developments of the Bear Stearns (BSC (javascript:stockSearch('BSC');)) fire sale is that many of the firm's 14,000 employees, as well as the firms many thousands of shareholders, have just watched their stakes in the company go up in smoke.
What's more, Sunday's news that JPMorgan Chase (JPM (javascript:stockSearch('JPM');)) would purchase Bear for $236 million, or $2 a share -- a fraction of its value even from the close of trading Friday -- sent fears that there might not be much of Bear Stearns left when the merger is set to be completed later this year.
"This is gonna go down as the biggest theft in all of financial history, said William Smith, portfolio manager of Smith Asset Management and a former Bear employee. "The $2 a share stock price is more symbolic than anything because the alternative is nothing."
"This is one of the unfortunate stories on Wall Street. I'm a former Bear guy. I have friends over there. My friends just watched their fortunes vaporize," Smith added.
The deal between JPMorgan and Bear was whipped together over the weekend to save Bear from both bankruptcy and possible liquidation. If approved by Bear shareholders, it will bring an end to the company's 85-year-old history.
Bear's employees currently own about one-third of the firm's stock. It was considered a point of pride among Bear employees to own stock in the firm, and selling that stock was considered bad form. Indeed, employees often received their annual bonuses in the form of stock. Bonuses received recently are now basically worthless.
Even the company's top management was required to own significant stakes. Former Bear Chief Executive Jimmy Cayne's was worth nearly $1 billion as recent as last year when the firm's stock was at $170. That paper wealth has now evaporated.
Another big loser in this deal might be British billionaire Joseph Lewis, who currently owns a 9.6% stake in Bear. In just a few months Lewis has lost about $1.16 billion in paper wealth.
It doesn't have to be just paper wealth that are going up in smoke. According to CNBC's Charlie Gasparino, JPMorgan is expected to lay off more than half of the company's 14,000 employees.
Combined with the stock's collapse, that places at least 7,000 highly-paid employees both poor and unemployed.
The plummeting shares of Bear is already causing shareholders to call their lawyers. The law firm Coughlin Stoia Geller Rudman & Robbins said it has filed a class action suit against Bear Stearns, claiming that company's executives were negligent in their duties to both employees and shareholders, according to Reuters.
According to the terms of Sunday's deal, JPMorgan will exchange 0.05473 of its shares for one share of Bear Stearns. It values Bear at just $236 million, compared to Bear’s Friday market capitalization of $3.54 billion.
The deal is expected to close in the next 90 days, and is subject only to shareholder approval, which both banks expect to happen.
"JPMorgan Chase stands behind Bear Stearns," said JPMorgan Chief Executive Jamie Dimon in a press release Sunday. "Bear Stearns' clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns' counterparty risk."
Shareholder approval could become a point of contention. In a conference call Sunday night, an individual shareholder asked JPMorgan why this deal was better than bankruptcy. When JPMorgan officials refused to answer and directed the question to Bear, the shareholder defiantly told JPMorgan he would vote down the merger.
"One of the more stunning developments of the Bear Stearns (BSC (javascript:stockSearch('BSC');)) fire sale is that many of the firm's 14,000 employees, as well as the firms many thousands of shareholders, have just watched their stakes in the company go up in smoke.
What's more, Sunday's news that JPMorgan Chase (JPM (javascript:stockSearch('JPM');)) would purchase Bear for $236 million, or $2 a share -- a fraction of its value even from the close of trading Friday -- sent fears that there might not be much of Bear Stearns left when the merger is set to be completed later this year.
"This is gonna go down as the biggest theft in all of financial history, said William Smith, portfolio manager of Smith Asset Management and a former Bear employee. "The $2 a share stock price is more symbolic than anything because the alternative is nothing."
"This is one of the unfortunate stories on Wall Street. I'm a former Bear guy. I have friends over there. My friends just watched their fortunes vaporize," Smith added.
The deal between JPMorgan and Bear was whipped together over the weekend to save Bear from both bankruptcy and possible liquidation. If approved by Bear shareholders, it will bring an end to the company's 85-year-old history.
Bear's employees currently own about one-third of the firm's stock. It was considered a point of pride among Bear employees to own stock in the firm, and selling that stock was considered bad form. Indeed, employees often received their annual bonuses in the form of stock. Bonuses received recently are now basically worthless.
Even the company's top management was required to own significant stakes. Former Bear Chief Executive Jimmy Cayne's was worth nearly $1 billion as recent as last year when the firm's stock was at $170. That paper wealth has now evaporated.
Another big loser in this deal might be British billionaire Joseph Lewis, who currently owns a 9.6% stake in Bear. In just a few months Lewis has lost about $1.16 billion in paper wealth.
It doesn't have to be just paper wealth that are going up in smoke. According to CNBC's Charlie Gasparino, JPMorgan is expected to lay off more than half of the company's 14,000 employees.
Combined with the stock's collapse, that places at least 7,000 highly-paid employees both poor and unemployed.
The plummeting shares of Bear is already causing shareholders to call their lawyers. The law firm Coughlin Stoia Geller Rudman & Robbins said it has filed a class action suit against Bear Stearns, claiming that company's executives were negligent in their duties to both employees and shareholders, according to Reuters.
According to the terms of Sunday's deal, JPMorgan will exchange 0.05473 of its shares for one share of Bear Stearns. It values Bear at just $236 million, compared to Bear’s Friday market capitalization of $3.54 billion.
The deal is expected to close in the next 90 days, and is subject only to shareholder approval, which both banks expect to happen.
"JPMorgan Chase stands behind Bear Stearns," said JPMorgan Chief Executive Jamie Dimon in a press release Sunday. "Bear Stearns' clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns' counterparty risk."
Shareholder approval could become a point of contention. In a conference call Sunday night, an individual shareholder asked JPMorgan why this deal was better than bankruptcy. When JPMorgan officials refused to answer and directed the question to Bear, the shareholder defiantly told JPMorgan he would vote down the merger.