JP Morgan is acquiring Bear Stearns for $2 per share ($235 million) in what will go down as one of the most spectacular flame-outs in investment banking history. Consider these three points:
- Bear Stearns was trading at $150 per share just 9 months ago representing a market cap over $17 billion.
- AOL last week announced the acquisition of Bebo for $850 million or almost 4x the acquisition price of Bear Stearns. Bebo's reported 2007 revenue - $20 million. Bear Stearns 2007 revenue - $6 billion.
- Widget maker Slide recently raised $50 million at a valuation of $550 million. Revenue - little to none.
Despite Bear's troubles this will one day be known as one of the best acquisitions of an investment bank or any business ever and will become a landmark deal in the career of Jamie Dimon.
If you were to look out 2-3 years from now and had to predict which one of these three deals will be the most lucrative for the acquirer/investor which deal would you choose?
We sure are living in interesting times!