If you are Joe Lewis, surely you would want bankruptcy, and the optionality that thereby remains in your stock position in Bear Stearns (BSC) rather than giving up at $2...who cares about the $2?
If you own CDS protection, might you want bankruptcy, and a payout on your default swap on BSC? Does paying > $2 to vote against it help?
If you are a (typical) Bear employee, do you really think that merging with JPM is the best chance of preserving your job, while giving up the optionality on your stock for $2? You're gone buddy, either way. No reason to vote for the deal, just like Joe Lewis.
Without the deal, of course, BSC is looking into a dark hole from which it might not return. Yet the entire financial system would have been looking into a darker and deeper one in the event of BSC's bankruptcy. Whither this negotiating power available to BSC over the weekend?
Somehow it seems that BSCs management have underplayed this last Ace. The deal works for everyone except those who get to vote on it. Is it too late for shareholders to remind us?
Monday, March 17, 2008
Bear Stearns Shareholders: Turkeys Voting for Christmas?
Labels: credit, investment banking
1 Comment:
Q1:What if you own Bear Stearns bonds? Surely worth buying some equity to help vote the takeover through?
Oddly enough you are interested in the equity being worth very little. Too much, and your bonds might end up back on the bonfire.
Q2:Doesn't Bear Stearns (goes tits up) sound more like a strip-joint than a bank?
Q3:How many firms in the S&P500 are probably bankrupt right now, we just do not know about it?
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