JPMorgan buys 11.5 mln Bear Stearns shares

NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N) said it bought 11.5 million shares of Bear Stearns Cos Inc BSC.N on the open market, in an effort to gain enough voting power to essentially guarantee its acquisition of the investment bank.

JPMorgan Chase said it plans to buy more shares of Bear Stearns, potentially until it has as much as 49.5 percent of the shares.

The bank is buying Bear Stearns, once the fifth-largest investment bank, which collapsed after a run on the bank. The Federal Reserve and U.S. Treasury encouraged JPMorgan Chase to buy Bear Stearns in a deal originally worth about $2 a share, and now worth about $10.07 a share.

The deal is painful to investors who own Bear Stearns shares that were once worth more than $170 apiece. People involved in the transaction, including JPMorgan Chase Chief Executive Jamie Dimon and Bear Stearns Chairman Alan Schwartz, were questioned by a Senate Committee on Thursday.

With the purchase disclosed Thursday, JPMorgan Chase owns about 12.98 million Bear Stearns shares, or about 8.9 percent based on the current share count.

JPMorgan paid $140.7 million for 11.5 million Bear Stearns shares on March 24, or an average of about $12.24 a share. That purchase took place the same day that JPMorgan said it was increasing its bid for Bear Stearns to about $10 a share in stock from its original bid on March 16 of $2 per share.

Bear Stearns shares traded above $10 on March 24, as some investors speculated an even higher offer could emerge.

Bear Stearns plans to issue another 95 million new shares to JPMorgan Chase. After those new shares, JPMorgan Chase should own about 44.9 percent of Bear Stearns. Holders of at least half of Bear Stearns' shares must vote in favor of the deal.

Bear Stearns chairman James Cayne sold most of his shares last week, signaling to investors that higher bids are not likely to be forthcoming.

On Thursday, shares of Bear Stearns closed 1.3 percent lower at $10.72 on the New York Stock Exchange.

(Reporting by Dan Wilchins; Editing by Tim Dobbyn, Gary Hill)