From the the London Guardian moments ago:
The cash-strapped Wall Street investment bank Bear Stearns was rescued from the brink of collapse tonight through a takeover by rival JP Morgan Chase for the rock-bottom price of $236m.Asian nations hold massive quantities of dollars. We'll update this post when news on today's Asian market sentiment becomes clear.
After a weekend of frenetic negotiations, Bear Stearns' board approved a stock-for-stock buyout at a valuation of just $2 per share. In a sign of the desperation of Bear Stearns' plight, the deal is at a 94% discount to the bank's closing share price of $30 on Friday night.
"The past week has been an incredibly difficult time for Bear Stearns," said the 85-year-old firm's chief executive Alan Schwartz.
"This transaction represents the best outcome for all of our constituencies based upon the current circumstances."
Before the credit crunch set in, Bear Stearns had a market capitalisation of more than $140bn. But the firm was hit by an evaporation in confidence culminating in a bank run by clients last week.
Without a buyout, Bear Stearns would almost certainly have been forced to declare itself bankrupt. Senior management rushed to negotiate a takeover before the start of the week's trading on Asian markets to avert mass withdrawals of funds by clients in Japan, China and elsewhere.
Dow Jones Market Watch also reports that the Fed has cut the funds rate to 3%, to inject more cheap money into the failing economy.
Gold is now trading at $1027 on the international spot market as we enter this data, BTW... up twenty bucks an ounce from only three hours ago. Still a bargain, in our view, at least in the long run.
