20080317 bear stearns employees 57107616 18
Employees walk through the revolving doors of Bear Stearns headquarters in New York City. - 


Doug Krizner: One of the most actively traded stocks yesterday was Bear Sterns. You know about the plan to rescue Bear from bankruptcy. The Fed's backing a deal for JP Morgan to buy Bear for just $2 a share.

But the stock jumped to nearly 6 bucks. There's speculation about JP Morgan being forced to pay more. And it seems a major British shareholder in Bear Stearns may be leading that push. Stephen Beard has more.

Stephen Beard: Joe Lewis, a British-born billionaire based in the Bahamas, is reckoned to own 9 percent of Bear Stearns. He began buying the shares last year, when the bank started to run into trouble. He apparently believed that the fifth-largest U.S. investment bank would not be allowed to go bust. It would be bought out by a rival.

He cannot have imagined the low price that rival might wind up paying. Under JP Morgan's low-ball offer, Lewis is thought likely to lose more than $1 billion. He's reported to be organizing a shareholder revolt.

Andrew Hilton of the CSFI think tank says lawsuits by shareholders could force a better deal:

Andrew Hilton: It's really a kind of legal blackmail. The idea really is that the legal costs for JP Morgan will be so high that at some stage it will settle.

And he says that could mean an offer of up $5 or $6 a share, much better than the existing deal -- but still a hefty loss for Joe Lewis.

In London, this is Stephen Beard for Marketplace.