Bear Stearns' Cayne Sells Once-$1 Billion Stake For $61 Million

NEW YORK — Bear Stearns Cos. Chairman James Cayne dumped his entire stake in the embattled investment bank for $61 million as it appears closer to a takeover by JPMorgan Chase & Co.

Cayne sold 5.66 million shares for exactly $10.84 a share on March 25, according to a filing with the Securities and Exchange Commission. His stake was once valued at about $1 billion when the stock was trading at $171.50 per share.

The filing was disclosed Thursday.

His stake at one point plunged to about $27 million when JPMorgan announced nearly two weeks ago it would acquire the No. 5 U.S. investment bank for $2 per share. JPMorgan later upped that offer to $10 per share, and agreed to acquire 39.5 percent of the company without a shareholder vote to block any rival offers.

On Thursday, Bear Stearns Chief Executive Alan Schwartz said in a letter filed to the SEC that the company will issue 95 million shares to JPMorgan within the next 10 days as part of the takeover deal. He said the latest agreement was "essential to maintaining the company's financial stability."

In addition, Schwartz said Bear Stearns is able to bypass shareholder approval because "securing stockholder approval would seriously jeopardize the financial viability" of the company. About one-third of the company's shares are owned by Bear Stearns' 14,000 employees.

Cayne, who serves as non-executive chairman, was said to be unhappy about the deal struck to sell the company he worked at for most of his life. He served as chief executive for 15 years until January, when he stepped down after Bear Stearns announced its first loss since being founded 85 years ago.

There has been some speculation that Cayne might join forces with Joseph Lewis, a billionaire financier who owns about 12 percent of the company. Lewis has expressed his interest in blocking a deal many considered to be hastily arranged, and one which severely undervalues Bear Stearns.

Both have recently tried to recruit investors to counter the JPMorgan offer, according to a report in the New York Post last week.

A spokesman for Lewis could not be reached for comment. And, spokesmen for JPMorgan and Bear Stearns declined to comment.

Bear Stearns shares rose 2 cents to $11.23 in trading Thursday. However, the stock fell more than 5 percent in after-hours trading. JPMorgan shares fell $1.25 to $42.86.

Comments

[totalliberal]

The end of Capitalism? Or just the beginning of the end?

[julianne]

Not long ago, Circuit City fired 3500 employees saying that they could hire other citizens for less money . On a different level, the Bear Stearne's bailout and subsquent fire sale to J.P. Morgan seems to run along the same major fault of their pathological hubris. I've read that Obama's favorite president is Abraham Lincoln. Lincoln said that if, untempered, the rich and their private institutions "will devour the nation." He said, "If it wasn't for this war, the first thing on my agenda would be that no citizen become a slave to big business"." I hope he takes those words to heart. It's only recently that we seem to have almost totally capitulated to the international gangsters that have now seized control of our country and colonized it.

[beekeeper]

ENRON mentality is the way to go. I think we the taxpayers should boycott paying taxes period

[themodernleader]

In our time unrestrained capitalism is so arrogant and daring that the corrupt leaders can take a great organization and bankrupt it, then pressure the government to bail our the fraud, then walk away with a personal fortune. In another time when our politicans were not politically owned by such leadership, the CEO James Cayne would have forfeited all his ill gotten gains and been tried, convicted and sentenced to a long prison term at hard labor.
We are witness to a government that does not work while the real authority is invested in self-interest, greed and avarice that has essentially bankrupted our Country. What else is there to do except weep and pray to a silent Divine Being who has turned away in disgust and shame from His once exceptional subjects.

[duckfan00]

61.3 million dollar is just the last sale. He has probably sold close to 750 million dollars in last year. And yes we the US taxpayers are footing the bill . Bush's base you gotta love these guys even when they screw up they have the system rigged so they win...

[geobushono]

life among the 'haves ad the have mores'.

[Noisemaker]

This may be the sequela of the sub-prime mortagage happened these years.

[Thatcher]

We have got to be the only economic power that rewards incompetence of the officers of failed corporations. When ... oh when ... will we ever learn?

[kellygrrrl]

can you say "Greenspan"

[WIpatriot]

Show reverence to Sir Alan....pffft

[Mass Irish 2nd Generation]

It is what they call the POLITICAL economy. Under our late stage of capitalism, those who are protected are BUSH'S BIG BOYZ "playas". Everyone else over the side into the shark infested water. Thanks again, Reagan Democrats. I hope you wake up because under a McCain Presidency, more of the same.
But then again, a post today detailed how Senator Obama is receiving contributions from the Wall Street Big Boyz and subprime sharpies. And his economic adviser is a defender of subprime mortgages.
If Bloomburg is his running mate, we will know the fix is in.

[ZingoBonMot]

Mortar forker!

[totalliberal]

Fargin Icehole!

[WIpatriot]

Steenking bastage.

[loki]

So the feds bail them out, The head of BS walks with 61 million, plus whatever he raped during his time at the top, and everyone else is left holding the bag. Smart move Feds.. You did it again. You helped the richest of the rich to get a little richer while everyone else suffers. What a great job.

[kellygrrrl]

so basically, WE the People are left with the bill and he sails off in his Private Jet. OK. Got it.

[Mass Irish 2nd Generation]

Yes, don't worry. We will GET it-right between the eyes and from out of our wallets.

[fact finder]

kellygirl; What does the preamble to the Constitution say about this.

[dadw5boys]

THIS IS HOW FREE MARKETS WORK???

Free money for the wealthy.

[Enid]

Brother can you spare me a dime ?

[WIpatriot]

Got change for a mill?

[maximilyun]

The taxpayers bail out his company with money we don't have, and he sells his stock for a cool $61M dollars? Makes sense to me.