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Bear Stearns Reportedly Weighs Stake Sale

It is in talks with China Construction Bank over a transaction of up to $4 billion.
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Bear Stearns


reportedly is negotiating to sell up to $4 billion of convertible bonds to a major Chinese bank, a transaction that could eventually leave as much as 20% of Bear's stock in foreign hands.

Bear CEO James Cayne is expected to meet Monday night with Chang Zhenming, the president of China Construction Bank, to discuss the deal, according to the

Wall Street Journal

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. The story said the talks are very preliminary and haven't been disclosed to the Chinese bank's major shareholders or regulator.

As envisioned, Bear Stearns would issue convertible bonds to China Construction Bank in return for between $2 billion and $4 billion. The bonds would be convertible into shares representing 10% to 20% of Bear's outstanding common stock.

China Construction is the country's third-largest bank by assets.

Shares of Bear Stearns have been major performers, rising 40% since the start of 2005 to a Thursday close of $141.21. Further appreciation in the price of the stock could be a problem for the China transaction, according to the