JPMorgan Chase buys Bear Stearns for about $2/sh

JPMorgan Chase has announced it is acquiring Bear Stearns for about USD 2 a share in stock. JP Morgan has agreed to buy Bear Stearns for USD 236 million. Bear Stearns has agreed to the JP Morgan buyout to avoid bankruptcy. Bear Stearns was forced into a government-led bailout on Friday.

JPMorgan has said that they will ensure that the stock trades till the deal is completed.

On Friday Bear Stearns had received emergency funding from JPMorgan Chase to stave off liquidity problems arising from the credit crisis.

JPMorgan Chase, in association with the Federal Reserve Bank of New York, will provide a secured loan facility for an initial period of up to 28 days, allowing Bear Stearns to access liquidity as needed.

Bear Stearns also said it is talking with JPMorgan Chase regarding permanent financing or other alternatives. The Board of the Federal Reserve has approved the proposal for such a bailout.

The Bear Stearns stock plunged almost 50 percent after the news of the financing came in.

James Glassman, Senior Economist at JP Morgan Chase Bank said that Bear Stearns will be folded with JPMorgan; it will be integrating its operations with the JPMorgan family.

Excerpts from CNBC-TV18's exclusive interview with James Glassman:

Q: 28-day facility for Bear Stearns. Elaborate a little bit more on that. What kind of financing would you be providing to Bear Stearns?

A: Now they have announced that JPMorgan was going buyBear Stearns. So, Bear Stearns will be folded with JPMorgan; will be integrating its operations with the JPMorgan family. So now it is sort of a moot point that the Fed has provided some liquidity.

Bear Stearns had a fair amount of liquidity because investors were pulling back. The hope is these investors will now come back and the liquidity problem for Bear Stearns and the combined operations will be a little more manageable.

Q: Is the valuation still quoted at USD 2 a share?

A: That is right. That is what they are saying.