With Bear Stearns in high-pressure talks this weekend with JPMorgan in an effort to close a buyout deal before markets open tomorrow, there are some ironies afoot. Chief among them? That Bear Stearns, which has been ravaged by over-exposure to the real estate mortgage market, may find that the biggest source of remaining value in the company is … real estate, albeit it’s own.
With Bear’s shares sharply lower and its liabilities unknown, JPMorgan could end up paying very little to acquire the firm. Bear’s market value has plunged to just $3.5bn from a peak close to $20bn in January last year, largely because of frenzied selling of its shares in the past week.
The value of Bear’s head office in a prime location on Madison Avenue, near JPMorgan’s offices, may account for a big portion of the eventual sale price. [Emphasis mine]