Bear Stearns shareholders may vote against JPMorgan bid (MarketWatch) (18-03-2008)

SAN FRANCISCO (MarketWatch) -- An investor stated that he would oppose the fire-sale deal during a conference call held by J.P. Morgan Chase & Co. Sunday to discuss its offer to buy Bear Stearns Cos. The possibility of this happening, even for a few months, is now being priced into the market, analysts said Monday.

The argument is that J.P. Morgan's offer is worth more than $2 a share after the bank's stock climbed 10% on Monday. Bear shares closed at $4.81 -- roughly double the value of the bid.

Joseph Lewis, one of Bear Stearns' largest shareholders, told CNBC on Monday that J.P. Morgan's offer was "derisory." The currency-trading billionaire owns almost 10% of the brokerage firm, having built a stake since September when the shares were trading at more than $100.

"People are speculating that shareholders aren't going to approve the deal for a while," said Ryan Lentell, an equity analyst at Morningstar, in an interview. "If market conditions improve, they may be able to negotiate for a higher price or another bidder may come to the table."

As part of the deal, J.P. Morgan immediately guaranteed all of Bear Stearns' trading obligations to try to encourage counterparties and clients to keep trading with the firm.

That guarantee remains in place until the acquisition closes and Bear is subsumed into J.P. Morgan's operations. However, if Bear shareholders reject the deal, they have to vote on it several more times over the next 12 months. During that time, the guarantee from J.P. Morgan remains in place, executives from the bank indicated Sunday.

Source MarketWatch