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China's CITIC Says Prospects for Bear Deal Are Unclear

Reuters
Monday, 17 Mar 2008 | 7:40 AM ET

China's CITIC Securities said on Monday that the prospects for its potential investment in Bear Stearns have become very unclear after JPMorgan said it would acquire the troubled Wall Street bank amid a snowballing credit crisis.

CITIC Securities, China's largest listed brokerage, had told Reuters in an e-mailed statement late on Saturday that, because of Bear Stearns' financial crisis, it could not guarantee it would reach a final agreement on a deal announced last October to invest about $1 billion in the U.S. investment bank.

CITIC Securities spokesman Raymond Tang said on Monday that the company was very unclear regarding the current situation between Bear Stearns and JPMorgan , as well as the prospects of its originally proposed deal with Bear Stearns.

However, he denied a report by Bloomberg News that CITIC Securities had cancelled its deal with Bear Stearns, citing Kong Dan, chairman of CITIC Group, the parent firm of CITIC Securities.

"The Bloomberg report is wrong," said Tang.

Tang declined to give a timeframe for when a final decision may be made on the potential investment in Bear Stearns, adding that it would take time for the firm to review the situation.

"You know that the Bear of today is not the Bear of yesterday," Tang said, referring to the acquisition by JPMorgan. "We are very unclear because we have lots of new things to study at the moment," he said.

The brokerage plans to hold a news conference on Wednesday in Beijing about "significant issues related to the development of CITIC Securities in 2008," the company said in an e-mailed invitation to Reuters.

Its parent company, CITIC Group, is directly led and controlled by the State Council, China's cabinet.

On Sunday, JPMorgan said it had agreed to pay just $2 a share for Bear Stearns, or a total of $236 million, although the bank put a total $6 billion price tag on the deal including litigation and severance costs.

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