UPDATE 1-JPMorgan's Bear bid a risky deal - Punk Ziegel's Bove

martes 25 de marzo de 2008 14:04 CET

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March 25 (Reuters) - JPMorgan Chase & Co's (JPM.N: Cotización) sweetened offer for Bear Stearns Cos Inc BSC.N carries high risk for JPMorgan, Punk Ziegel analyst Richard Bove said, adding that according to his calculations JPMorgan was paying about $65 per share for Bear excluding the planned issue of new Bear shares.

JPMorgan, facing pressure from disgruntled Bear shareholders, raised its all-stock offer for Bear on Monday to about $10 a share from its original bid of $2 a share.

Under the revised deal, JPMorgan will also buy 95 million newly issued Bear Stearns shares. With those shares, JPMorgan would own 39.5 percent of Bear.

Bove's calculation puts the total cost of the deal at $3.44 billion, or about $23.75 per share excluding the new shares.

Adding in a likely 12-month loss of $6 billion to combine the companies, the offer price rises to about $65 per share, he said.

"Investors believe that JPMorgan is underbidding for Bear Stearns... I do not," said Bove, one of first financial analysts to recommend selling financial stocks.

As early as last July 18, Bove recommended selling shares of Bear Stearns, Goldman Sachs Group Inc (GS.N: Cotización), Lehman Brothers Holdings Inc LEH.N, Merrill Lynch & Co Inc MER.N and Morgan Stanley (MS.N: Cotización), saying the financial system was growing at a pace that could not be sustained by economic growth.

Including the planned share issue by Bear Stearns, most analysts estimated that the new offer valued Bear at about $2.1 billion. The original offer valued Bear at about $236 million.   Continuación...