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Bear
Stearns, China''s CITIC Securities to form alliance
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| 22 October 2007 |
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Mumbai:
US investment bank Bear Stearns Cos, hit by a mortgage market
slump, will swap stakes with China''s CITIC Securities Co
and form a broad alliance, the two firms said in a joint
statement.
Under the tentative deal, CITIC would invest about $1 billion
in Bear Stearns securities that would be converted to about
6 per cent of the New York-based investment bank. Bear Stearns
in turn would buy $1 billion of CITIC debt that would converted
to a 2 per cent stake in the Beijing-based firm over a period.
Neither company can hold more than 9.9 per cent of the other''s
stock. The deal is subject to a definitive agreement. While
the two companies have agreed to negotiate with each other,
they also said there was no assurance a deal.
A deal would prop up Bear Stearns and increase access to
business in booming Asia, it would provide a good opportunity
for CITIC to expand overseas and learn from global players.
A deal needs the approval of China''s State Council as well
as securities regulators and shareholders.
CITIC
Securities, the largest brokerage in China and Asia''s biggest
by market value, hopes to extend its financial services
business.
The companies, in a statement, said the alliance would include
broad collaboration in China and the development of new
securities for the rapidly growing Chinese market.
Bear and CITIC will form a new Hong Kong-based capital markets
joint venture doing business across Asia. Bear will contribute
its Asia operations to the 50:50 venture.
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