Bear Stearns Is Sued on Sale of Building
By CHAD BRAY
May 23, 2008; Page C3
NEW YORK -- The owner of
the Madison Avenue land on which Bear Stearns Cos. built its
headquarters sued the investment bank, saying the bank breached an
agreement giving the landowner the right to make the first offer for the
building.
In a lawsuit filed in New
York State Supreme Court in Manhattan, 383 Madison LLC, a New York
corporation, claims Bear Stearns failed to negotiate in good faith and
breached their agreement by entering into a contract that provided
J.P. Morgan Chase & Co. an irrevocable option to purchase the
building.
J.P. Morgan Chase, which
is in the process of buying Bear Stearns, is also a defendant in the
lawsuit.
"At no time did Bear
Stearns even attempt to honor its contractual duties to plaintiff, which
would have required providing plaintiff with notice of the potential
agreement with JPMorgan and engaging in negotiations with plaintiff
relating to the purchase of the building," the lawsuit said.
Bear Stearns was pushed to
the brink of failure after a liquidity crunch in March, and J.P. Morgan
Chase stepped in with a takeover bid. The deal is expected to be
completed soon; a shareholder vote is set for May 29.
The lawsuit claims J.P.
Morgan Chase has the right to purchase the building for $1.1 billion if
the merger agreement isn't consummated.
383 Madison LLC says the
fair market value of the building exceeds $1.1 billion and it should be
able to purchase the building for the same price J.P. Morgan Chase would
pay.
"We believe the suit has
no merit," said Joseph Evangelisti, a J.P. Morgan Chase spokesman.
A Bear Stearns spokesman
didn't immediately return a phone call seeking comment late Thursday.
Write to Chad Bray
at chad.bray@dowjones.com1
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