JPMorgan Chase - A Tale of Two Mergers

            
 
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Case Details:

Case Code : BSTR222
Case Length : 16 Pages
Pages Period : 1997-2006
Organization : JP Morgan, Chase Manhattan, Bank One
Pub Date : 2006
Teaching Note :Not Available
Countries : US
Industry : Banking

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"This landmark transaction will create one of the world's great financial services companies - a powerful enterprise well-positioned to generate significant value for our shareholders, customers and communities." 1

- William B. Harrison, Chairman and CEO, JPMorgan Chase in January 2004.

Introduction

On January 01, 2006, Jamie Dimon (Dimon) took over as the new CEO of the US-based banking major JP Morgan Chase & Company (JP Morgan Chase). Dimon was earlier the CEO of Chicago-based retail banking and credit card major - Bank One Corporation (Bank One).2

He was instrumental in the turnaround of Bank One in 2001 and also negotiated the acquisition of Bank One by JP Morgan Chase & Company in January 2004 for US$ 58 billion.

In terms of deal size, this was the third largest acquisition in the US history. After the merger, Dimon was appointed President and Chief Operating Officer of JP Morgan Chase under William B. Harrison, who was then Chairman and CEO.

The JP Morgan Chase - Bank One merger was looked upon favorably by many industry analysts who felt that the deal would strengthen JP Morgan's weak retail business and extend the bank's presence geographically across the US.

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However, some analysts thought otherwise. JP Morgan Chase had only recently come into existence as the product of a merger between JP Morgan & Company Incorporated and Chase Manhattan Corporation on September 13, 2000, and the integration of the two had not yet been completed.

Acquiring a new retail bank at this point would complicate the situation and increase the risk for the newly merged entity, in their opinion.

On this, E. Reilly Tierney, Analyst at Fox Kelton said, "The last thing people want is for Morgan to add risk."3

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1] "JP Morgan Chase & Co. and Bank One Corporation to Merge,"www.jpmorganchase.com, January 14, 2004.

2]Bank One Corporation was formed as a result of the merger between Banc One Corporation and First Chicago NBD Corporation announced on April 13, 1998.

3] Emily Thornton, "Commentary: J.P. Morgan Should Cut the Merger Talk," www.businessweekonline.com, May 26, 2003.

 

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