If it completes its startling acquisition of troubled investment bank Bear, Stearns & Co., JPMorgan Chase & Co. would be acquiring a significant healthcare business.
JPMorgan Chase agreed to pay about $236 million, or roughly $2 per share, to acquire Bear Stearns Cos., the parent of Bear, Stearns & Co., in a deal announced Sunday. The shares were worth $100 each as recently as last December, according to Commodity Systems. The U.S. Federal Reserve Bank has agreed to guarantee $30 billion in potential assets, including many faltering mortgage securities, that have wracked Bear Stearns.
Bear Stearns has a distinct healthcare group within its investment banking unit, according to the companys fiscal 2007 annual securities filing. The disclosures of its healthcare stock analysts indicate that Bear Stearns seeks investment banking work from the for-profit companies that the analysts report on.
The banks not-for-profit healthcare investment banking came under scrutiny in a whistle-blower lawsuit filed in U.S. District Court in Chicago in 2004. The lawsuit, filed by executives at Edward Hospital, Naperville, Ill., named the firm and one of its leading executives in Chicago, Nicholas Hurtgen, in an alleged conspiracy to coerce certificate-of-need applicants to use Bear Stearns and a particular construction company when seeking CON approval. Criminal charges against Hurtgen are still pending; a federal judge threw out the charges against him, but prosecutors refiled them in December 2007.
JPMorgan was the largest underwriter of healthcare syndicated loans between Sept. 1, 2006, and April 9, 2007, as measured by Thomson Financial. Bear Stearns was not in the top 25 during that period. -- by Vince Galloro