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Bearer of good news on the Street

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Published March 24, 2008 at 5:51 PM
Charging_Bull_at_Bowling_Green.jpgJ.P. Morgan Chase & Co.'s sweetened deal for ailing Bear Stearns Cos. sparked a market rally Monday, sending the Dow Jones Industrial Average soaring 187.32 points to close at 12,548.64. J.P. Morgan in a statement Monday said it will pay 0.21753 of a share, or about $10 for each share of Bear Stearns, up from about $2 per share announced on March 16. The new deal brings the total price to about $2 billion, including debt, up from the $240 million, without debt, announced a week ago. Bear Stearns stock soared 88.76% to close at $11.25 Monday. 

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  • The majority of deal stocks saw bullish movement following the Bear news. Borders Group Inc. skyrocketed 43% to close at $7.25 per share. The book seller announced on March 20 that it has hired J.P. Morgan Securities Inc. and Merrill Lynch & Co. to help explore strategic alternatives including a sale of all or parts of the company. Borders' largest shareholder Pershing Square Capital Management LP has committed to lending $42.5 million and may purchase some of the retailer's international operations. In exchange, Pershing is set to receive warrants that can by exercised into an additional 19.9% share in the company. 
  • CIT Group Inc. climbed 35.31% to $13.03 per share Monday following a Wall Street Journal report that the commercial lender is in talks with overseas banks to secure low-cost funding to finance its core business. The report follows an announcement from CIT last week stating that it tapped a $7.3 billion credit line to help move forward its operations and pay down debt. 
  • The March 24 Department of Justice approval with no attached conditions of the $13 billion merger of satellite radio providers XM Satellite Holdings Inc. and Sirius Satellite Inc. was music to investors' ears as XM's stock gained 15.49% to close at $13.79 per share and Sirius increased 8.62% to $3.15. The deal still awaits approval from the Federal Communications Commission.
  • MBIA Inc. lifted 10.95% Monday to close at $14.17 per share following news that Fitch Ratings has decided to maintain its triple-A credit rating on the bond insurer. MBIA had requested that Fitch withdraw its rating and has decided to stop providing the ratings agency with nonpublic information about its portfolio. MBIA may be biting the hand that feeds it as Fitch is the only of the three ratings agencies that has maintained the top rating on the monoline.
-Michael Rudnick


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