Bear Stearns And Fortress Talks Fail To Complete

by Stewart Douglas

Story link: Bear Stearns And Fortress Talks Fail To Complete

Preliminary talks held by investment bank Bear Stearns and private asset management group Fortress Investments over a potential partnership deal have today collapsed over issues of tax complications and equity pricing, fuelling calls for Bear Stearns to find an ally in the banking industry in order to provide support as it looks to turn around its faltering business.

The leading US investment bank today opened talks with Fortress over a potential deal that would see mutual cooperation with the two firms short of a merger, and would provide Bear Stearns with the vital support and assistance it needs to get back off the ground following terrible quarterly results, the collapse of two notable hedge funds and now the departure of its long-time chief executive James Cayne.

It is thought the deal was driven by personal connections between the two firms, with now non-executive Chairman and former chief executive James Cayne having a friendship and mutual respect for Wes Edens, the founding father of Fortress, which would have come to completion had it not been for the involvement of several debated issues, which ultimately lead to the collapse of the deal.

Aside from the tax issues that became problematic, the problem of discrepancies in share valuations came to a head, with Bear Stearns very much on a downward slope compared to the buoyant status of their intended partnership targets.

Analysts within the industry are now calling for Bear Stearns to redouble its efforts in looking to find a banking partner, which it is thought will help provide it with the common resources to propel its success and grow its business in light of the depth of problems recently experienced by the bank.