Update 3:45 AM: Alert reader Steve wrote to tell me another shoe has already dropped, and has been curiously gone largely unnoticed. JP Morgan's option to buy the headquarters is being contested by the ground lease holder. This is a huge oversight. I can't imagine someone at Bear didn't know that this is the sort of thing that its acquirer would want to know, but hey, you pay a knocked-down price in haste, it's your obligation to know what exactly you are getting. At a minimum, this is pretty embarrassing. I assume that the bank will have to pay the plaintiff to go away. Wonder if they'll be able to avoid disclosing the amount.
This story ran in
Reuters on Thursday:
In the lawsuit, filed in New York state court, 383 Madison LLC claimed that under a ground lease Bear used for the property, 383 Madison was supposed to be given an opportunity to buy the building if Bear ever considered selling it.
In March, when JPMorgan offered to buy Bear Stearns, it was given an option to purchase the Bear Stearns building for $1.1 billion, even if the deal were to fall apart....
383 Madison claimed Bear committed itself to scenarios under which it would sell the building to JPMorgan without even attempting to give the land owner notice of the agreement or engage in negotiations with it. It also claimed JPMorgan ignored the company's rights under the ground lease.
"JPMorgan wrongfully and intentionally induced Bear Stearns to breach the Ground Lease and the Right of first offer for its own personal gain," the suit claims. The land owner is seeking the right to acquire Bear Stearns' interest in the building or because it believes the building is worth more than $1.1 billion it is asking for the fair market value of the building above that price, according to the lawsuit.
