Monday, 17 March 2008 01:00

Joe Lewis on the Bear Stearns buyout

"Bear Stearns' second largest shareholder, Joe Lewis, said Monday JPMorgan's $2 a share offer for the investment bank is "derisory."

"I think it's a derisory offer, and I don't think they will get shareholder approval," Lewis said, in an interview with CNBC.

Lewis also discounted rumors that his position in Bear Stearns was leveraged.

The British-born billionaire, who amassed his fortune as a currency trader, is the biggest individual loser in Bear Stearns' debacle. It is estimated that he has lost nearly $1 billion from his decision to pile into Bear Stearns stock in recent months."

The problem with the deal is that it is too low, and too favorable for Morgan. It is literally guaranteed to drive angst from the other side. Whenever you do a deal, you always make sure the other side gets to walk away with something. If you don't you always risk the deal falling though unnecessarily. $2 is a slap in the face to employees who have lost a life savings and have the power to block the deal. At the very least, by the building at market price and get the company for free!

Last modified on Monday, 17 March 2008 01:00

2 comments

  • Comment Link Paul Choi Tuesday, 18 March 2008 00:10 posted by Paul Choi

    Yes, it is true that $2 price tag is ridiculously low, particularly given the BSC building that is apparently part of the deal. But I am uncertain as to whether anyone else would have been able to purchase BSC, at ANY PRICE. Given the liability attached to the purchase, $2 may, in fact, be too high. (You would be a better person to parse this aspect of the deal.) Apparently there was no other offer! Which is better? $2 or Chapter 11? When there is just one potential buyer while under the inordinate time duress, I suspect that the deal was the proper thing to do. I believe the management team of BSC are shrewd businessmen as well and they agreed presumably after weighing all available options.

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  • Comment Link Johnny Lay Monday, 17 March 2008 22:18 posted by Johnny Lay

    Well I don't have a dog in this fight. I am suprised at how quickly (in one 'tick') the share price went from 30.XX to 2.00. Wonder what that list of counterparties looked like before the shredders got cranked up. More to the point, I wonder if any copies survived. I'm suprised that there is no outcry from the 'free press' about 'free markets'. jussayin.

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