JPMorgan Chase & Co. won approval Thursday of its government-arranged fire-sale purchase of Bear Stearns Cos., shuttering the 85-year-old Wall Street giant and putting an estimated 60% of Bear Stearns' 14,000 employees out of a job.
About 84% of Bear Stearns' shareholders voted to approve the takeover during a 10-minute meeting at the firm's New York headquarters. The gathering was chaired by Chairman James "Jimmy" Cayne, who was replaced as chief executive by Alan Schwartz in January.
"I personally apologize for what has happened," Cayne, 74, told shareholders, according to a person who attended the meeting. "It's a sad day."
Outside the building, some Bear Stearns workers and shareholders vented their frustration by writing comments on a portrait of Cayne, including "My blood is boiling" and "Should we raise more capital?"
The sale, announced in March, capped an eight-month slide in the company's fortunes that began in July with the collapse of two Bear Stearns hedge funds that invested in securities linked to sub-prime mortgages. Those failures caused investors to doubt the value of any asset linked to the mortgage market, Bear Stearns' biggest business.
On March 14, the Federal Reserve agreed to lend $13 billion to Bear Stearns through JPMorgan to prevent the collapse of the firm, which faced an exodus of clients and lenders. Facing a potential bankruptcy, Schwartz was forced to accept a $2-a-share offer from JPMorgan to buy the company. JPMorgan later agreed to raise the price to $10 a share under pressure from Bear Stearns shareholders, many of whom were employees.
Bear Stearns stock sold for as much as $173 in January 2007.
Founded in 1923, Bear Stearns survived the Great Depression and first sold shares to the public in 1985 under then-CEO Alan "Ace" Greenberg. Now, the company's brand name will all but vanish.
The deal is expected to close today but will face lawsuits from shareholders who said the purchase price was still too low. JPMorgan held 49.5% of the company as of May 9, and the shareholders say its stake unfairly skewed Thursday's vote.
Bear Stearns, once the fifth-largest U.S. securities firm, joins a list of vanished Wall Street firms subsumed by merger, including First Boston, Salomon Bros., Dillon Read and Donaldson Lufkin & Jenrette. The one Bear Stearns vestige will be its retail brokerage, which will keep the brand and operate as a separate unit in JPMorgan's asset management division.