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Friday, March 21st, 2008

Billionaire Joseph Lewis Maneuvering for a Better Bear Stearns Deal

By Mike Caggeso
Associate Editor

Down more than $1 billion from his 8.4% stake in crippled financial giant The Bear Stearns Cos. Inc. (BSC), British billionaire Joseph Lewis said he’ll try to steer Bear Stearns away from the U.S. Federal Reserve-backed JP Morgan & Chase Co.’s (JPM) acquisition offer of $2 per share.

Lewis said his shareholder group will take "whatever action that they deem necessary and appropriate to protect the value of their investment in the shares," including lobbying Bear Stearns and third parties to consider another transaction, the Associated Press reported.

Lewis could have in his corner the support of Bear Stearns employees, who collectively hold 30% of the company’s shares. Senior managing directors, who have threatened to vote against the buyout, own many of those shares.

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But JP Morgan is trying to woo those same employees into giving the deal the green light. In a private meeting with Bear Stearns managers, JP Morgan Chairman James Dimon offered cash and stock incentives in an attempt to win takeover approval and prevent key employees from leaving the firm, Bloomberg reported, citing two people familiar with the meeting.

Lewis’ Motivation 

Last summer, Lewis began buying Bear Stearns shares after two of the bank’s hedge funds collapsed. 

But a Securities and Exchange Commission filing shows just how many shares Lewis owns. Lewis filed on Wednesday that he holds 12.1 million shares of Bear Stearns stock through several affiliated investment companies including: Aquarian Investments Ltd., Cambria Inc., Nivon Inc. and other entities, the AP reported.

More than 560,000 of those shares were bought for $55.13 a piece on March 13, just four days before the investment bank nearly collapsed, forcing Bear Stearns to accept JP Morgan’s bail out. 

JP Morgan’s deal was revalued at about $278.5 million, or $2.32 a share, the Wall Street Journal reported.

After dropping to $2.84 a share earlier this week, Bear Stearns stocks have rallied to close at $5.96 yesterday (Thursday), an 11.82% gain. Should Lewis maneuver a buyout at that price per share, he’ll pocket - well, "salvage" is the more correct term - an extra $36.8 million.  

News and Related Story Links:

Lewis said his shareholder group will take "whatever action that they deem necessary and appropriate to protect the value of their investment in the shares," including lobbying Bear Stearns and third parties to consider another transaction, the Associated Press reported.

Lewis could have in his corner the support of Bear Stearns employees, who collectively hold 30% of the company’s shares. Senior managing directors, who have threatened to vote against the buyout, own many of those shares.

But JP Morgan is trying to woo those same employees into giving the deal the green light. In a private meeting with Bear Stearns managers, JP Morgan Chairman James Dimon offered cash and stock incentives in an attempt to win takeover approval and prevent key employees from leaving the firm, Bloomberg reported, citing two people familiar with the meeting.

Lewis’ Motivation 

Last summer, Lewis began buying Bear Stearns shares after two of the bank’s hedge funds collapsed. 

But a Securities and Exchange Commission filing shows just how many shares Lewis owns. Lewis filed on Wednesday that he holds 12.1 million shares of Bear Stearns stock through several affiliated investment companies including: Aquarian Investments Ltd., Cambria Inc., Nivon Inc. and other entities, the AP reported.

More than 560,000 of those shares were bought for $55.13 a piece on March 13, just four days before the investment bank nearly collapsed, forcing Bear Stearns to accept JP Morgan’s bail out. 

JP Morgan’s deal was revalued at about $278.5 million, or $2.32 a share, the Wall Street Journal reported.

After dropping to $2.84 a share earlier this week, Bear Stearns stocks have rallied to close at $5.96 yesterday (Thursday), an 11.82% gain. Should Lewis maneuver a buyout at that price per share, he’ll pocket - well, "salvage" is the more correct term - an extra $36.8 million.  

News and Related Story Links:

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Read more on Bear Stearns Companies, J P Morgan Chase at Wikinvest

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