How Much Are Bear’s Data Centers Worth?
In a stunning case of reverse sticker shock, Bear Stearns has been sold to J.P. Morgan for $270 million, or just $2 a share. Bear’s stock (BSC) had closed at $30 Friday and $57 Thursday. Shortly after the announcement, the Federal Reserve cut its discount rate by a quarter-point to 3.25 percent, and Wall Street braced for a difficult Monday.
The sale price shows little confidence in the value of Bear Stearns’ financial assets. Paul Kedrosky noted Saturday that “the value of Bear’s head office in a prime location on Madison Avenue, near JPMorgan’s offices, may account for a big portion of the eventual sale price.”
And what about its data centers? Bear Stearns has facilities in Whippany, New Jersey and MetroTech Center in Brooklyn, as well as a two-story network operations center (NOC) within its New York headquarters.
Bear Stearns’ Whippany data center is a 100,000 square foot mission-critical facility, built in 1997 as part of a 600,000 square foot campus. Bear also has a data center as part of its operations at One Metrotech Center in Brooklyn, a 950,000 square foot facility. Both data centers have high-speed connections to Bear Stearns’ headquarters building at 383 Madison Avenue, a 43-story, 1.2 million-square-foot office tower. Bear Stearns also has substantial infrastructure supporting its low-latency trading operation.
How might these facilities be valued in a rational market? It remains to be seen. In coming hours we will see how the J.P. Morgan-Bear Stearns deal is digested by the market, and who ends up making decisions about the company’s technology real estate assets.
JP Morgan Chase’s primary IT operations is based in Columbus Ohio (Bank One). Just like all of the operations since the JPChase/IBM IGS break JPChase has done a lot of consolidation. With a fire sale like this one i’ll bet this consolidation will happen faster than useal.