Bear Stern will be purchased for just $2 per share.

JPMorgan Chase & Co. has announced it is acquiring beleaguered rival Bear Stearns Companies Inc. for just $2 per share.

The Boards of Directors of both companies have unanimously approved the transaction which will be a stock-for-stock exchange.

JPMorgan Chase will exchange 0.05473 shares of JPMorgan Chase common stock per one share of Bear Stearns stock. 

In addition to the financing the Federal Reserve ordinarily provides through its Discount Window, it is to provide special financing in connection with the transaction of up to $30 billion of Bear Stearns’ less liquid assets.

JPMorgan Chase’s Chairman and Chief Executive Officer, Jamie Dimon, commented on the takeover: “This transaction will provide good long-term value for JPMorgan Chase shareholders. This acquisition meets our key criteria – we are taking reasonable risk, we have built in an appropriate margin for error, it strengthens our business, and we have a clear ability to execute.”

Bear Stearns’ President and Chief Executive Officer, Alan Schwartz, added: “The past week has been an incredibly difficult time for Bear Stearns. This transaction represents the best outcome for all of our constituencies based upon the current circumstances.”

By Natasha Piscitelli