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Investors Ask Delaware Court To Halt Bear Stearns Deal

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Everyone has been expecting lawsuits under federal securities laws to be filed by Bear Stearns investors. But perhaps more important is the Delaware lawsuit linked in Opening Bell today. The Delaware suit has been filed by investors seeking a higher price than JPMorgan Chase's bid of $10 per share. They've asked a Delaware judge to stop the deal. Gordon Smith, on the Conglomerate, argues that they probably won't win.
Larry Ribstein, at Ideoblog, agrees. "In my view, in both cases [that the plaintiffs are likely to rely upon] the essential issue should be whether the board exercised its fiduciary obligations to preserve shareholder value, which is what the shareholders as a whole wanted them to do. And in both cases it arguably did, because the deal protection move secured the only promising deal in sight – in Omnicare, the Genesis bid, and in Bear, the quintupling of the Morgan bid," he writes. Interestingly, this sheds new light on JP Morgan's decision to raise the bid: it may help it sail through Delaware courts more easily.
Bear Stearns Investors Challenge JPMorgan Share Deal [Bloomberg]