By Zachary R. Mider and Miles Weiss

March 20 (Bloomberg) -- Billionaire investor Joseph Lewis, the largest shareholder of Bear Stearns Cos., said he may push the company to consider alternatives to the $366 million buyout offer from JPMorgan Chase & Co.

Lewis will take ``whatever action'' he deems necessary to protect his $1.26 billion investment in New York-based Bear Stearns, he said in a filing yesterday with the U.S. Securities and Exchange Commission. He said he may ``encourage'' the firm and ``third parties to consider other strategic transactions.''

Lewis, 71, and Thunderstorm Capital's John Dorfman have threatened to oppose the JPMorgan purchase. The third-biggest U.S. bank agreed March 16 to buy Bear Stearns in an all-stock deal that values the securities firm at $2.52 a share, or $366 million, based on today's closing price. Bear Stearns stock closed at $30 two days before the firm was forced to accept JPMorgan's terms or face bankruptcy after customers and lenders abandoned the broker because of concern about a cash shortage. The Federal Reserve agreed to provide as much as $30 billion to JPMorgan to get the deal done.

``If he gets others to vote with him he may be able to get some token increase in the price,'' said John Coffee, a securities law professor at Columbia University in New York, referring to Lewis. ``He's not going to get a significantly higher bid because no one else can get the Fed's support and the Fed's financing.''

$1.19 Billion Loss

Lewis paid an average of $103.89 apiece for his 12.14 million Bear Stearns shares, according to yesterday's filing. He started accumulating most of his shares last July and has lost about $1.19 billion on the investment, or almost half his wealth, which Forbes magazine estimated at $2.5 billion in its 2007 survey.

Bear Stearns has traded at a premium to the JPMorgan buyout price since the deal was announced, as traders bet that resistance from shareholders would force a higher offer. The shares rose 63 cents, or 12 percent, to $5.96 at 4:15 p.m. in New York Stock Exchange composite trading.

``I think it's a derisory offer and I don't think they will get it,'' CNBC quoted Lewis as saying about the JPMorgan bid during a telephone interview on March 17. His spokesman, Douglas McMahon, didn't reply to a request for comment. Bear Stearns spokesman Russell Sherman declined to comment.

JPMorgan climbed $3.50 to $45.97 in New York.

Cayne's Stake

The SEC filing yesterday showed that Lewis purchased 1.04 million Bear Stearns shares during February and March, raising his total stake to 8.35 percent of common shares outstanding. His price per share ranged from $55.13 to $86.31. He said he may dispose of his holdings entirely or bet that the stock will drop further.

James ``Jimmy'' Cayne, Bear Stearns's former chief executive officer, has seen the value of his holdings evaporate. Cayne, 74, owns about 5.8 million Bear Stearns shares. He ranked as Wall Street's richest CEO, with $1.3 billion of assets, according to a 2007 Forbes magazine survey. His stake in the firm approached $1 billion last year when the stock reached its peak price of $171.51. His shares are now worth about $31 million.

Lewis and Cayne, who remains Bear Stearns non-executive chairman, are trying to find investors to counter JPMorgan's offer, the New York Post reported yesterday, citing people familiar with the situation.

No Solicitation

The two men have solicited private-equity firms including J.C. Flowers & Co. and Kohlberg Kravis Roberts Co.; banks including Barclays Plc, HSBC Holdings Plc, Credit Suisse Group and Royal Bank of Scotland Group Plc; sovereign wealth funds and China's Citic Securities Co., according to the Post.

The merger agreement with JPMorgan discourages rival bids in several ways, according to a report from RiskMetrics, which advises investors on proxy votes. JPMorgan has an option to buy 20 percent of the company at $2 a share, RiskMetrics said, putting other bidders at a disadvantage. JPMorgan can also buy Bear Stearns's Madison Avenue headquarters for $1.1 billion. Further, Bear Stearns managers and directors are barred from soliciting better offers.

Lewis, a former currencies trader born in an apartment above a pub in London's East End, owns a house in Lyford Cay in the Bahamas and spends much of his time in Argentina.

He drew headlines in the 1990s when he accumulated almost 30 percent of auctioneer Christie's International and mounted an effort to take the company private. He sold the stake to French billionaire Francois Pinault in 1998 for $244 million.

Pub Receipts

Tavistock Group, his holding company, owns the Isleworth golf course in Windermere, Florida, and has acquired stakes in companies including sporting-goods maker Puma AG, luxury-carmaker Bristol Cars Ltd. and Ambrx Inc., a genetics-engineering firm.

After dropping out of school at 15 to become a waiter in his father's catering company, he expanded the business into a chain of restaurants and opened tourist souvenir shops in Geneva, London and Rome. He got into currency trading as a means of investing receipts from his pubs and shops in yen, dollars and European currencies. He sold the family business in 1979.

To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net; Miles Weiss in Washington at mweiss@bloomberg.net

Last Updated: March 20, 2008 17:01 EDT