JPMorgan's Dimon snags a bargain in Bear Stearns

By Chris Reiter

NEW YORK (Reuters) - Jamie Dimon's grab of Bear Stearns may turn into one of the biggest bargains in recent years.

Banking experts were almost unanimous in their appraisal of the move by JPMorgan Chase & Co, which is run by Dimon, to buy Wall Street rival Bear Stearns Cos Inc.

"It's my opinion that this represents a great bargain for JPMorgan," said Samuel Hayes, emeritus professor of finance at Harvard Business School.

"Bear Stearns was, until this year, one of the smartest and most profitable investment banks in the world," said Hayes. "This could be a real money-spinner for JPMorgan."

JPMorgan agreed on Sunday to buy Bear Stearns, which was slammed by a sudden cash crunch, for about $2 a share -- about 90 percent below its Friday close. The all-stock deal values the company, recently ranked as the No. 5 U.S. investment bank, at about $236 million (118 million pounds).

Brad Hintz, an analyst with Sanford Bernstein, estimated that a breakup of Bear Stearns would fetch $7.7 billion. "This is a tremendous bargain for JPMorgan shareholders," he said in a note.

The deal will cost JPMorgan more than just stock. The bank is setting aside $6 billion to cover deal-related costs such as litigation and severance, putting the total cost much higher.

"Even with an estimated $6 billion of transaction costs, the deal economics look very compelling," said Citibank analyst Keith Horowitz.