Comments on: JP Morgan’s Guarantee Wasn’t A Misstep

By: guest

guest — Tue, 25 Mar 2008 19:08:53 +0000

Wasn’t the issue for JPM that the following statement by Black (not the one referenced in the article) was correct (and thus JPM might not have fully understood the guaranty): “If in the future the shareholders do fail to approve the transaction, then our guarantee would no longer apply prospectively.” The previous guaranty seemed to provide that, even if the shareholders don’t approve the transaction, that guaranty would continue to apply to new liabilities until the merger agreement is terminated (and the failure of the shareholders to approve the deal does not automatically terminate the merger agreement — the merger must be re-submitted to the shareholders, and the merger agreement will remain effective for up to a year).

By: guest

guest — Tue, 25 Mar 2008 18:09:07 +0000

Its not really JP Morgan – its bancOne making believe its JP Morgan.
The easter Bunny always seemed trust-worthy.

By: guest

guest — Tue, 25 Mar 2008 17:51:05 +0000

I’m seriously bothered that JP Morgan would openly welsh and deceive the public in this way. The guarantee that Black gave on the conference call was clear as hell – it would last for the lifetime of all transactions Bear entered into over the next year (or until the deal closed).
If you can’t trust JP Morgan to honor their word, who can you trust?

By: legal eagle

legal eagle — Tue, 25 Mar 2008 17:13:53 +0000

Not that I’m really adding much new here, but I have to agree that it wasn’t a drafting error (and that’s not just because I’m an attorney). The guarantee was only a few pages and not very com-plex, making the probability of a drafting error is very low. Drafting errors happen all the time on larger docs (and generally they don’t matter because on a clear mistake/clerical error, the in-tent of the parties will be looked at).
I think that JPM had to sign the 1 year guarantee as a concession to buying the company at $2 per share. Since both parties thought they were in a worse position after the document was signed and since neither side’s shareholders seemed to like the idea either (or the public for that matter), the deal had to be renegotiated–move the price to $10 and take the guarantee away. Hell, at the end of the day, the deal may actually be worth about the same amount.
And 10:15, I think you’re right that Wachtell wants to protect its brand, but truth is, it’s largely considered the best law firm in the US (and really the world). The most tactful thing for it to do at this point is probably to stand beside JPM. I think this move shows a greater level of class and will encourage other companies to seek Wachtell’s work. Law firms often take the heat for their clients. It’s an unfortunate part of our job, but probably necessary for good business relations.

By: guest

guest — Tue, 25 Mar 2008 15:15:48 +0000

“In other words, Dimon’s indignation at his lawyers looks like a pretext for another problem with the original deal, namely, that Morgan no longer wanted the deal to stay open for a whole year if Bear’s shareholders rejected it.”
Interesting if true. Wachtell has a brand to protect, and if this wasn’t a lawyer’s drafting error, one would think Wachtell would want to protect that brand. Is loyalty to client JPM more important?

By: guest

guest — Tue, 25 Mar 2008 15:02:14 +0000

Good work, John. Truly you led the way on this front, and the MSM is following your lead.

By: guest

guest — Tue, 25 Mar 2008 14:49:13 +0000

Are you implying that they may have extended an employment guarantee to all junior college graduates as well?

By: guest

guest — Tue, 25 Mar 2008 14:08:45 +0000

I was in a Chase branch on 43rd/Lex yesterday…and they had about 10 extra people working than the usual crew.