A few days ago, we said we were willing to eat a bit of crow. Even though we had acknowledged some time ago that Bear might not survive the subprime mess as an independent firm, we also thought that no one with any sense would take a strategic position (taking a speculative bet is an entirely different matter). Investment bank acquisitions have a terrible track record, and a minority stake, even with a preferred return and other contractual protections, isn’t a great position to be in either. Bear’s rough, highly entrepreneurial culture makes it particularly unsuitable for a strategic suitor.
At least for the moment, crow-consumption appears to be premature. It turns out that the rumors of Bear talking to possible investors appears to have been just that, mere rumors. From CNBC.com:
Investment bank Bear Stearns doesn’t appear to be holding talks about selling a stake to Warren Buffett or any other investors, contrary to earlier reports.
Shares of Bear Stearns rose sharply after the New York Times reported Wednesday that the company was in serious talks with Buffett and several other investors, including Bank of America, Wachovia and two Chinese banks.
But people have told CNBC that at present, Bear Stearns isn’t holding talks with anyone.
Citing unnamed people briefed on the discussions, the Times said the talks involved the sale of up to a 20 percent stake in Bear Stearns…
Analysts who follow Bear Stearns have expressed doubts about the deal.
“I’m not certain why Bear would want to sell a piece of itself at an impaired value,” Brad Hintz, an analyst at Sanford C. Bernstein, told Reuters Thursday.
“This management team has gone its own way for too many years to suddenly decide it wants to sell out at a low valuation. It’s a fine franchise that just went through a very difficult environment, but fixed-income problems don’t last forever.”