Shareholders of The Bear Stearns Cos. Inc. of New York today approved the purchase of the investment bank for about $10 a share, for a total of $2.2 billion, by JPMorgan Chase & Co. of New York.
The buyout vote was passed with 84% of shares voting in favor of the merger, which is now scheduled to close on May 30.
Each share of Bear Stearns common stock will be converted to 0.21753 shares of JPMorgan Chase common stock.
The buyout deal controversially included a guarantee of $29 billion from the Federal Reserve to counter losses from mortgage-backed securities.
Agence France-Presse quoted Fed Chairman Ben Bernanke defending the move in order to “preserve the integrity” of the financial system, and he dismissed claims that the funds were a “bailout” from the U.S. taxpayer.
JPMorgan Chase and the Federal Reserve Bank of New York have also agreed to complete the sale of “assets by subsidiaries of Bear Stearns” — soured mortgage-backed securities — to the Fed “on or about June 26” rather than when the merger closes in order to “ensure the smooth transfer of this large portfolio,” according to a statement from JPMorgan Chase.
A former darling of Wall Street that traded at $171 a share before the credit crisis began, Bear Stearns' collapse started last summer when it was forced to bail out one of its hedge funds for $3.2 billion.
The firm has since become the highest-profile victim of the credit crunch.
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