In retrospect, the writing was on the wall: JP Morgan has increased its offer for Bear Stearns to $10 a share in stock (0.21753 shares of JP Morgan for every share of Bear).
In conjunction with the increased offer price, Bear will issue 95 million new shares to JP Morgan which they will pay $10 a share for in stock. This will give them a big stake in Bear and aid them in moving along the approval process (JPM Press Release).
With the stock price refusing to trade down to $2 last week, the obvious fact that with the Fed backstop JP Morgan was getting a steal, and the politics involved, this really shouldn’t come as much of a surprise. I, along with a bunch of others obviously, had a feeling about this – just wish I’d put my money where my mouth was (see “Question Of The Day: Is $2 A Fair Price For Bear Stearns?”, Monday March 17, 2008).
Disclosure: Top Gun has no position in Bear Stearns (BSC) or JP Morgan (JPM) shares.