Migdal will pay JP Morgan $70.25 million for its half of Migdal Capital Markets.
Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) has signed an memorandum of understanding (MOU) with JP Morgan Chase & Co. (NYSE: JPM) for the 50% stake in Migdal Capital Markets Ltd. held by Bear Stearns Asset Management Inc. (BSAM) for $70.25 million. JP Morgan acquired BSAM as part of its takeover of collapsed Bear Stearns Companies Inc. (NYSE: BSC) earlier this year.
Migdal Insurance will acquire the Migdal Capital Markets stake through Migdal Investments Ltd. When the deal is completed, Migdal Insurance will directly and indirectly own 100% of Migdal Capital Markets. Migdal will finance the deal from its own resources and pay JP Morgan when the deal is closed.
Migdal is also foregoing Bear Stearns' commitment under the original shareholders deal in Migdal Capital Markets, for non-competition during the period after the sale of Bear Stearns' stake in the company.
A condition of the deal is that Bear Stearns Companies will release its guarantee for activity by a Migdal Capital Markets subsidiary in the government bond market. Migdal Insurance has an option of asking for indemnification if the Bear Stearns' guarantee is exercised. The Migdal Capital Markets subsidiary will cease being a market maker for government bonds on August 31.
Published by Globes [online], Israel business news - www.globes-online.com - on August 17, 2008
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