Shareholders of Bear Stearns will get stock in JPMorgan equivalent to about $2 a share, compared with $30 at the close on March 14, the New York-based companies said in a statement. The Federal Reserve is providing financial backing to JPMorgan, second-biggest US bank.

JPMorgan Chief Executive Officer Jamie Dimon bought Bear Stearns, once the biggest underwriter of US mortgage bonds, for less than the value of its real estate after clients, alarmed by speculation about a cash shortage, withdrew $17 billion in two days.

Fed funding

JPMorgan will give investors 0.05473 shares of its common stock for every share of Bear Stearns they own. Including shares in an employee-incentive plan, the purchase price may reach $270 million. JPMorgan will get funding for transaction from the Fed, including support for as much as $30 billion of Bear Stearns’s “less-liquid assets.”

Founded in 1923, Bear Stearns survived the Great Depression and first sold shares to the public in 1985, under then-CEO Alan “Ace” Greenberg. Sunday’s fire-sale to JPMorgan caps an eight- month slide in the company’s fortunes that began last July with the collapse of two of its hedge funds, which invested in securities linked to subprime mortgages. Those failures caused investors to doubt the value of any asset linked to the mortgage market, Bear Stearns’s biggest business. The collapse of Bear Stearns ranks along with Drexel Burnham Lambert Inc. as the biggest in Wall Street history.

Bear Stearns’s profit exceeded $2 billion in 2006, yet the price JPMorgan is paying is about one quarter the value of the securities firm’s headquarters building in midtown Manhattan. The 1.2 million-square-foot, 45-story structure built in 2001 is worth about $1.2 billion.