J.P. Morgan Chase & Co. announced Sunday it is acquiring troubled Wall Street rival Bear Stearns Companies Inc. for just US$2 a share in stock.

The move was widely speculated last week when it was announced that Bear Stearns had to turn to J.P. Morgan for emergency funding last week. The price represents a dramatic discount as Bear closed at US$30 per share on Friday, down US$27 on the day.

J.P. Morgan Chase will exchange 0.05473 shares of its common stock per each share of Bear Stearns stock. The boards of directors of both companies have unanimously approved the transaction.

Effective immediately, J.P. Morgan is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is providing management oversight for its operations. Other than shareholder approval, the closing is not subject to any material conditions. The transaction is expected to have an expedited close by the end of the calendar second quarter 2008.

The Federal Reserve, the Office of the Comptroller of the Currency and other federal agencies have given all necessary approvals. The Fed has also will provide special financing for this transaction, agreeing to fund up to US$30 billion of Bear Stearns’ less liquid assets.

“J.P. Morgan Chase stands behind Bear Stearns,” said Jamie Dimon, chairman and CEO of J.P. Morgan Chase, in a release. “Bear Stearns’ clients and counterparties should feel secure that J.P. Morgan is guaranteeing Bear Stearns’ counterparty risk. We welcome their clients, counterparties and employees to our firm, and we are glad to be their partner.”

Dimon added, “This transaction will provide good long-term value for J.P. Morgan Chase shareholders. This acquisition meets our key criteria: we are taking reasonable risk, we have built in an appropriate margin for error, it strengthens our business, and we have a clear ability to execute.”

“The past week has been an incredibly difficult time for Bear Stearns. This transaction represents the best outcome for all of our constituencies based upon the current circumstances,” said Alan Schwartz, president and CEO of Bear Stearns.