Bear Sterns buy-out a "low ball" offer.

no way, no way at all this deal goes through at 2$ a share. Not going to happen, the notional value alone is priced above this offer.

Bear Stock Triples JPMorgan Bid as Traders Seek More (Update2)

By Zachary R. Mider and Sree Vidya Bhaktavatsalam

March 18 (Bloomberg) -- Bear Stearns Cos.' stock rose 44 percent to more than three times the current $275 million value of JPMorgan Chase & Co.'s acquisition as traders increased bets that investors will push for a higher offer.

JPMorgan, with backing from the Federal Reserve, agreed two days ago to buy the New York-based securities firm for about $2 a share in stock to prevent a collapse. The value of the transaction has climbed to $2.31 a share as the bank's stock price has rallied. Bear gained $2.12 to $6.93 at 1:30 p.m. in New York Stock Exchange composite trading.

Yesterday, billionaire Joseph Lewis, Bear's second-biggest shareholder, called the price ``derisory,'' according to a phone interview cited by CNBC. Other investors may share that opinion. During a conference call the day the deal was announced, an individual investor said he would vote against the sale.

``It's perfectly possible that the deal you see right now is not the deal you're going to get,'' said Nancy Havens, president and founder of Havens Advisors LLC, which invests in takeover targets. ``There's every incentive for shareholders to vote `no' the first time.''

Havens said she didn't buy Bear yesterday because she wasn't convinced the offer would rise any more.

Opposition

``Certainly, it looks like a significant number of shareholders are deciding to vote against the deal,'' James Ellman, who oversees $200 million as the president of San Francisco-based SeaCliff Capital. Investors are saying ``Bear Stearns can survive on its own, JPMorgan will have to up the price, or that another bidder is about to emerge,'' he added.

Ellman, whose hedge-fund firm specializes in financial stocks, sold his Bear stock about a year ago.

Bear climbed to $171.51 last year and closed at $30 on March 14, the last trading day before New York-based JPMorgan stepped in. The book value was $84 a share as recently as November.

``It's a race between the bondholders and shareholders to buy as much stock as they can,'' said Brian Shapiro, managing director of Source Capital NY. ``They have divergent interests at this point.''

Bondholders could be buying stock because they want the deal done, while shareholders are trying to amass a larger stake because they want to vote the deal down, Shapiro said.

Bear spokesman Russell Sherman didn't immediately return a call seeking comment. Douglas McMahon, a spokesman for Lewis, didn't return a call seeking comment.

JPMorgan, based in New York, will pay 0.05473 share for each of Bear's 118 million shares outstanding. The bank rose $1.81, or 4.5 percent, to $42.12, after increasing 10 percent yesterday.

To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net; Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net
Last Updated: March 18, 2008 13:43 EDT