CITIC Sec says its Bear Stearns deal is off
SHANGHAI (Reuters) - CITIC Securities, China's biggest listed brokerage, said on Tuesday it has decided to terminate its planned strategic cooperation with Bear Stearns, including a $1 billion investment in the U.S. bank, after the troubled bank was bought by JPMorgan.
"The preconditions and basis for the strategic cooperation agreement announced on November 2, 2007, do not exist any more after the JPMorgan acquisition," CITIC Securities said in a statement.
"As a result, the company has decided to terminate cooperation plans with Bear Stearns including originally planned investments by Bear Stearns and CITIC Securities in each other," it added.
On Sunday, JPMorgan said it had agreed to pay just $2 a share for Bear Stearns, or a total of $236 million, although the bank put a total $6 billion price tag on the deal including litigation and severance costs.
Last October, CITIC Securities announced plans to invest about $1 billion in Bear Stearns securities that would convert into about 6 percent of the New York-based investment bank.
In return, Bear Stearns would buy $1 billion of CITIC Securities' debt that would over time amount to a 2 percent stake in the Beijing-based firm.
CITIC Securities had told Reuters in an e-mailed statement late on Saturday that, because of Bear Stearns' financial crisis, it could not guarantee it would reach a final agreement on the deal.
"Since the company has never signed any formal agreement with Bear Stearns and has never paid any money to Bear Stearns, the company will not bear any losses or investment risk from the termination of the originally planned deal," CITIC Securities said in the statement.
"However, the company will continue to push forward its strategy of global expansion and the target of the company's strategic expansion (in the global market) will not be changed by the termination of the Bear Stearns deal," it added.
On Monday, CITIC Securities spokesman Raymond Tang said the company was still unclear about the situation between Bear Stearns and JPMorgan, as well as the prospects of its originally proposed deal with Bear Stearns.
CITIC Securities' parent company, CITIC Group, is directly led and controlled by the State Council, China's cabinet.
(Reporting by George Chen; Editing by Edmund Klamann)
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