JPMorgan Chase Co was in talks to quintuple its offer to buy Bear Stearns Cos to $10 per share in an effort to pacify angry Bear shareholders, The New York Times said on Monday.

JPMorgan's original agreement on March 16 to pay $2 per share for the stricken Bear, was widely considered a fire-sale price after the Wall Street bank saw the value of its investments pummelled by a meltdown in the subprime mortgage market.

The agreement had won support of federal regulators, but the U.S. Federal Reserve is now balking at the new price, the newspaper said, citing people involved in the talks. As a result, the renegotiated merger might be postponed or collapse, the newspaper said.

A $10 per share offer would value Bear at more than $1 billion. That price, however, is less than one-third where the stock traded on March 14, the last trading day before the original merger was announced. It is also less than 10 per cent where the stock traded in much of 2007.

Representatives of Bear and JPMorgan did not immediately return calls seeking comment.

According to the newspaper, Bear was seeking to authorize the sale of a 39.5 per cent stake on Sunday night, freeing it under Delaware law from obtaining shareholder approval. That would leave JPMorgan needing only slightly more than 10.5 per cent of shareholder support to clinch the transaction.

As part of the original transaction, the Fed extended a $30 billion credit line to JPMorgan to finance Bear's most illiquid assets.

The newspaper said the central bank also directed JPMorgan to pay no more than $2 per share to assure that it would not appear that Bear shareholders were being rescued, citing people involved in the talks.

Bear shares closed Thursday at $6.39, reflecting investors' expectations that JPMorgan might raise its bid, or Bear might find another suitor to offer a sweetened price. (Reuters)