JoeyDVivre Wrote: ------------------------------------------------------- > If that calculation is right, the stockholders > should be feverishly working to reject the deal. > The JPM balance sheet is available from lots of > other sources GS? MER? If they are that keen, with that good balance sheets, why haven’t they come forward with a bid already? The only people I’ve heard mentioned are JC Flowers (don’t know) and RBS. RBS is a definite no-no, they are the most highly geared bank in the UK, they’ve just done the ABN deal, and they are looking for asset sales rather than buys. > and the Fed backstop won’t go away Maybe not, but there’s no reason that they couldn’t (acting as lender of last resort) impose punitive terms that was tantamount to wiping out the equity. I know that moral hazard is unfashionable, but the preexisting equity needs to go away on this deal. State support shouldn’t be the basis for valuing a company. > if the shareholders reject the deal (at least > that’s how I would play it). JPM synergies, well, > I dunno but they aren’t worth 11.75 billion. Agreed! They are worth a bit though, and it’s non negligble > I’m still offering $3 (although I guess others are > now offering $4.75). Short covering? Dead cat? Know something I don’t? Almost certainly! I doubt any deal could get done at $10 though.
> > GS? MER? If they are that keen, with that good > balance sheets, why haven’t they come forward with > a bid already? > This is also a big question mark in my mind as well. Maybe I should buy some GS/MER puts?
I don’t think those other firms would get the same backing from the fed that JPM got (at least at this point).
From what I heard its not only the 200 something million equity that they got. I heard JPM is going to spend about 6 billion dollars in severance with employees and litigation costs with other parties.
That’s what they’ve put aside - not (quite) the same thing as saying they *will* spend. If people knew in advance how much the litigation would cost/raise, they would never litigate in the first place! They’d just settle at that price…
adehbone Wrote: ------------------------------------------------------- > Joey, you seriously still think this deal will not > go through? It has been accepted by the Fed, and > many other parties. > > I fear the angry posts you will have once you > fully accept that the Fed basically tried so hard > to bail out a major US bank. Which ultimately lead > to them being sold for $2/share. Oh yeah, I’m still seriously confident that this deal will not go through at $2/share. Good thing you are saved from my angry posts.
at this point, even though I pointed out in another thread that the market is only pricing in about a 9% of the deal falling through, I’m not sure it goes through at 10… But hey–you know what they say about risk arb… Eats like a bird, $h!ts like an elephant…
I’m with you on that and I get this overwhelming feeling that there is something else at play here we don’t know about yet. $2 -> $10 in weekend deals… Hmmm…
yep, there is something else at play. My taxes paying for worthless mortgages.
cfa_mba_caia Wrote: ------------------------------------------------------- > If the Fed is bailing out $30B in backup > guarantees, they could have added another $2B and > sold Bear for $16 or so, which looks like a face > saving number. > > $2 a share is nothing and surely going to impact > others on the street. I really don’t understand > why they could not have added another $2B. $10 is closer to my original ballpark number of $16.
So after re-doing the calculations… BS Market cap = 6.7B New sales price of 10$/share = 1.1B BS Manhattan Building option priced at = 1.1B (Orig price = 1.4B) Lawsuits/ Litigation as proposed by JMPC = 6B (though we don’t have the exact re-conciliation of how they got to this very amount) 6.7 - 1.1 - 1.1 + 6 = 10.5B = gain for JPMC?? (On the surface of things…)
Well done on that call Joey. I still don’t know if it makes any sense. Supposingly there was news that all the banks were able to bid on BS, but JPM could only get troops together so quick to do a due diligence on the books, because JPM was considering buying them last summer or something? The Fed has decided to only back JPM. So why is JPM so worried to get this deal done quickly? There must be something in those books and BS derivatives OTC dealings, that JPM wants no one else to find.
dinesh.sundrani Wrote: ------------------------------------------------------- > So after re-doing the calculations… > > BS Market cap = 6.7B > New sales price of 10$/share = 1.1B > BS Manhattan Building option priced at = 1.1B > (Orig price = 1.4B) > Lawsuits/ Litigation as proposed by JMPC = 6B > (though we don’t have the exact re-conciliation of > how they got to this very amount) > > 6.7 - 1.1 - 1.1 + 6 = 10.5B = gain for JPMC?? (On > the surface of things…) Also factor in that a large chunk of those 6B in expenses come from write-downs, not actual losses…
dinesh.sundrani Wrote: ------------------------------------------------------- > So after re-doing the calculations… > > BS Market cap = 6.7B > New sales price of 10$/share = 1.1B > BS Manhattan Building option priced at = 1.1B > (Orig price = 1.4B) > Lawsuits/ Litigation as proposed by JMPC = 6B > (though we don’t have the exact re-conciliation of > how they got to this very amount) > > 6.7 - 1.1 - 1.1 + 6 = 10.5B = gain for JPMC?? (On > the surface of things…) oops, BODMAS mistake … Cash Inflow = 6.7 - 1.1 + 1.1 - 6 = 0.7B ??
Also figure in that only in 3 days, JPM said there is roughly $33 billion of Mortgage exposure. Though only $2 billion is in subprime. They expect 20 of the $30 billion Fed cash will goto mortgage exposure alone.
David Wyss of Standard & Poor’s http://www.cnbc.com/id/15840232?video=695868598&play=1 very thoughtful…
JDV, two good calls (once before on CitiCorp)…I hope you are following through with real dough.
Anyone have any BSC swag laying around they want to get rid of? http://www.reuters.com/article/marketsNews/idUSN2538449520080325 Sold! Bear Stearns T-shirt gone for $151.76 Tue Mar 25, 2008 2:35pm EDT By Jennifer Ablan NEW YORK (Reuters) - A used T-shirt bearing the Bear Stearns logo has sold for $151.76 online, worth about 14 or 15 shares in the once venerable Wall Street investment bank. Bear Stearns shirts and other trinkets have been snatched up in recent days on eBay’s Internet auction site. This particular extra-large men’s T-shirt, blue, with a white Bear Stearns logo, attracted over 1,600 visitors and sold for $151.76 on Monday night, a price no doubt prompted by the sudden fall of the fifth-largest U.S. investment bank. The Bear Stearns takeover by JPMorgan Chase & Co has generated public interest reminiscent of Enron’s demise. Other auction items include umbrellas, coffee mugs, cafeteria cards, hard hats and a pewter reproduction of Bear Stearns’ midtown Manhattan office building, which was included in the fire sale. “Be the first to get your paws on classic Bear Stearns memorabilia,” read one post auctioning a miniature plastic toy bear that was going for $28 on Tuesday morning. Another Bear Stearns bear wearing a business tie attracted over 1,400 visits and a high bid of about $150. The T-shirt seller, Jennifer Cseplo of Dublin, Ohio, said her husband got the shirt as a gift four years ago and wore it to work out in. “I thought I would get $20 for it and be happy. This is pretty crazy,” Cseplo said. On March 16, JPMorgan Chase said it would acquire its rival the Bear Stearns Co Inc. for only $2 per share, in a deal brokered by the Federal Reserve aimed at heading off a bankruptcy and a spreading crisis of confidence in the global financial system. On Monday, JPMorgan raised its offer to about $10 a share to appease angry stockholders who vowed to fight the original deal. Bear Stearns traded at $10.80 a share near midday on Tuesday.
Bear Stearns Equity Analysis Week A Management: “Yeah things are fine”. Week B Management: “We’re screwed” Week C JPM: “Don’t worry, we’ll help, give us your entire company for the aggregate value of all of your firm’s coffee making paraphanaglia”. “$2 a share”. “And don’t worry, we got backing from Bernake & Co., a privately held US Dollar printing press”. Week D JPM: “Uhh…so like I think the market knows that a lot…okay all…of our counter party risk is with you clowns”. “$10 a share, and that’s our final offer”. “Um…until week E when we’ll pony up $20…um…or $25…”. “Or $50”. Willy
I’m selling $50 calls cheap. Phone me.