New York (PTI): US financial services major JP Morgan Chase has agreed to buy beleaguered investment bank Bear Stearns for a mere two dollars a share which is about one-tenth of its price on Friday.

JP Morgan Chase would pay about USD 270 million in stocks in the face of Bear's huge losses on investments linked mortgages.

The government regulators have approved the deal which would help to stem the plummeting confidence in financial companies having an adverse effect on the economy.

In January 2007, Bear's share had traded at USD 170 but fell sharply as mortgage crisis gripped the market and closed at 30 dollars share at New York Stock Exchange on Friday after it was forced to seek emergency funding because of the cash crunch.

JP Morgan said the deal would be effective immediately.

The transaction would be a stock-for-stock exchange and JP Morgan would exchange 0.05473 shares of JP Morgan Chase common stock per share of Bear Stearns stocks.

Based on the closing prices on March 15, the transaction would have a value of about two dollars per share.

There are no conditions attached to the deal and it is expected to be approved by the share holders by the end of second quarter of this year.

The Federal Reserve, the Office of the Comptroller of the Currency (OCC), and other federal agencies have given all necessary approvals.