Bear Stearns Shareholders Vote In Favor Of J.P. Morgan's Historic Bid

New York, NY (AHN) - Bear Stearns Cos. shareholders voted on the most historic deal on Thursday approving the sale of the company to J.P. Morgan Chase & Co.

Bear Stearns, which will officially be a part of J.P. Morgan by Friday, was sold for around $1 billion offered by the investment house

The 15-minute shareholder meeting was presided over by Bear Chairman James Cayne.

"It's a sad day, but we'll get through it, and we may be better off for it," Cayne said in a brief statement as reported by The Wall Street Journal.

Alan Schwartz, the chief executive of Bear Stearns added: "Through this whole thing, Bear employees have been consummate professionals. I'm thrilled that many of you will have new jobs at a first-class organization."

The deal to sell the 85-year old brokerage, which had a stock-market value of $20 billion in January 2007, was engineered in March by the Federal Reserve of New York and Treasury Department.

The decision was made to avoid a collapse of the company, which some market analysts dreaded to create a financial tsunami and damage to the broader American financial system.

J.P. Morgan Chase, which is a part of the Dow Jones Industrial Average, is buying Bear Stearns for about $10 a share, which were $171 a share in January 2007, on March 24 that was raised from its previous bid of $2 a share or $236 million on March 16.

The bid was increased to the current deal after the shareholders were outraged at the initial buyout offer, which was more than 90 percent below its closing price before the takeover was reported by J.P. Morgan.

Under the agreement, the U.S. central bank has decided to provide a guarantee of as much as $29 billion of Bear Stearns' riskiest loans, whereas J.P. Morgan will takeover the firm's trading and core banking responsibilities.

J.P. Morgan will have to bear the first $1 billion of any losses incurred in financing for Bear's less-liquid assets including its mortgage securities.

"[Cayne's] not going to be suffering financially like a lot of other people," Jackie Furlaiter, a shareholder whose late husband was a former Bear trader on the floor of the New York Stock Exchange, told The Journal.

"As far as I'm concerned, it was a farce."

The deal also means that thousands Bear Stearns workers will lose their jobs.

According to the reports last week, J.P. Morgan's CEO Jamie Dimon indicated that the firm is likely to retain only 45 percent of the 14,000 staff employed at Bear Stearns.

Bear Stearns got in to financial troubles after two of its hedge funds collapsed in June 2007, which was the same period when the economy started struggling with the subprime mortgage losses.

J.P. Morgan has also agreed to guarantee all of Bear Stearns's trading obligations for another year under the agreement.

Meanwhile, shares of Bear Stearns traded at 1.9 percent and J.P. Morgan Chase as 2.2 percent higher in New York trading around 12:37 p.m. EDT.