JPMorgan buys up Bear shares

JPMorgan Chase & Co. said it bought 11.5 million shares of Bear Stearns Cos. on the open market in an effort to gain enough voting power to essentially guarantee its acquisition of the investment bank.

JPMorgan paid $140.7 million, or about $12.24 a share, for the stock on March 24. That day the firm said it was increasing its bid for Bear Stearns to about $10 a share in stock from the $2 a share negotiated by the companies March 16. JPMorgan had to pay more than $10 a share because there was market speculation that an even higher offer could emerge.

As part of the revised deal, Bear Stearns plans to issue 95 million new shares to JPMorgan before the acquisition is complete. With those shares, JPMorgan would own about 45% of Bear Stearns. Holders of at least half of Bear Stearns’ shares must vote in favor of the transaction.

The Federal Reserve and U.S. Treasury encouraged JPMorgan to buy Bear Stearns, which was the fifth-largest U.S. investment bank before its near-collapse last month after a run by investors.