The Bear Stearns rumors are back. "Bear
Stearns Could Become Takeover Target," we’re breathlessly told, although
if you read all the way to the final four words of the article, you do find
out at the end that, for now at least, "Bear isn’t for sale."
Glad that’s cleared up.
The idea is that if Bear becomes cheaper, it could get taken over. But I have
a feeling that’s entirely wrong. A $10 drop from current levels would take the
stock all the way down to – oh, where it was back in September. When there
was no furious takeover speculation.
More to the point, Bear Stearns is only slightly less closely held than Dow
Jones. Its employees in general, and its CEO in particular, have de facto
control over whether the company is sold. And, like any bankers, they tend
to like to sell high, rather than sell out during a period of distress.
Personally, I can’t imagine Cayne selling out under any circumstances. But
if he is going to sell out, I’m sure it would be at a significant premium to
Bear’s all-time high. That’s the number which matters, not the premium to where
the stock happens to be trading today or next week.