CITI and Stearns in alliance

Source: Exec Digital USA

Date :10/22/2007 8:50:51 AM

Bear Stearns Cos and China's CITIC Securities Co said on Monday they have reached a cross-shareholding deal to form a broad strategic alliance.

The strategic alliance will cover a "broad collaboration" in China and a joint venture in Hong Kong that will "offer a broad range of capital markets services on a pan-Asian basis."

The firms will each spend around $1 billion to buy each other's shares.

Beijing-based firm CITIC will invest $1 billion in the investment bank which has been hit by the mortgage market slump and will receive 40-year trust securities that would convert into about six percent of the equity in the New York-based bank.

It will also form a Hong Kong-based joint venture to bring together their operations outside of China.

Bear Stearns plans to buy $1 billion of CITIC debt that would over time amount to a two percent stake in the firm.

The two sides said they agreed in principle and that successful completion depends on governmental and regulatory approvals.

October 22 2007

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