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Chase Manhattan in talks to take over JP Morgan in latest US bank
Independent, The (London), Sep 13, 2000 by Andrew Garfield
CHASE MANHATTAN is in talks to take over its US banking rival JP Morgan in a deal that could be worth up to $35bn (pounds 25bn), sources close to the negotiations said last night.
Reports of a takeover, which could be announced as soon as this morning, came after it emerged yesterday that Dresdner Bank is also in talks to buy Wasserstein Perella, the US investment banking boutique, for as much as $1.5bn.
News of the talks comes as the pace of consolidation on Wall Street heats up, with European firms scrambling to retain a foothold in an increasingly US-dominated investment banking business. Credit Suisse last week paid $13.4bn for Donaldson, Lufkin & Jenrette, while its Swiss rival UBS bought PaineWebber in July for $16bn.
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JP Morgan has recently been seen as target of both Chase and Deutsche Bank. Bear Stearns and Lehman Brothers have also seen their shares repeatedly buffeted by takeover talk and Wall Street observers believe it is only a matter of time before they too are snapped up.
JP Morgan's shares leapt to $180 in after hours trade last night, giving it a market value of almost $29bn. Chase shares closed down $1716 at $56116.
JP Morgan, the US's fifth-largest bank with $266bn in assets, has long been seen as an attractive target on account of its lucrative money management unit. Takeover rumours were fuelled last week by the sudden resignation of its chief financial officer, Peter Hancock.
A deal would catapult Chase, which currently ranks as the third- largest bank holding company in the US, into the ranks of the top Wall Street banks alongside Goldman Sachs and Merrill Lynch. Chase has been building up its corporate finance side and mergers business over the past two years, with the purchases of the UK investment bank Robert Fleming, Hambrecht & Quist and the investment bank boutique Beacon Group.
For Dresdner, the acquisition of Wasserstein would fulfil its long- standing ambitions to acquire a US investment banking business to supplement Kleinwort Benson, the City merchant bank it bought nearly five years ago. Banking sources stressed yesterday that while discussions were advanced , there had been no final agreement on price.
Wasserstein Perella shot to prominence in the US leveraged buyout boom in the late 1980s. But the partnership suffered in the early 1990s, leading Joseph Perella to quit the firm for Morgan Stanley.
Since then, Bruce Wasserstein has reinvented the firm as a more mainstream corporate adviser, recently picking up a series of high- profile mandates, including advising PaineWebber on its takeover by UBS, and Time Warner, the media giant, on its attempted merger with America Online. The deal is set to leave Mr Wasserstein substantially richer and with a top position in Dresdner Bank. Another big beneficiary will be Nomura, the Japanese bank which bought a 20 per cent stake in Wasserstein Perella in 1988 for $100m.
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