Is it a done deal?

The more I think about the Bear Stearns deal, the more I wonder if it will fall apart. After all, this is a merger proposal, and stockholders for both sides have to approve the deal. And, even with approval of the majority, minority shareholders of Bear Stearns can file an action if they believe they are being forced out at less than "fair value." It's clear that as recently as the close of business last Friday (after it was well known that Bear Stearns had a massive liquidity problem), the "market" thought Bear's shares were worth over $30.00 each. Now, of course, information may have come out in the review of Bear's books over the weekend that showed the market to be wrong, but it seems unlikely that, short of massive fraud, the market could have been wrong by a factor of more than 15 fold. Absent a massive fraud, the prevailing market price is ordinarily taken as the best starting point for assessing fair value. My guess is that Bear's shareholders could make a pretty persuasive case that the company is worth more than JP Morgan Chase is paying for it.

If that's the case, the shareholders might well vote against the merger and kill the deal. Where does that leave things? Frankly, I don't know. There aren't many drawing boards left to go back to.