Chase to Buy J.P. Morgan

N E W  Y O R K, Sept. 13 -- Chase Manhattan has agreed to acquire J.P. Morgan for about $36 billion in stock, creating a unionbetween two of the oldest and most prestigious financial firms inthe United States.

The boards of both companies have approved the deal, thecompanies said in a statement early today. The new entity willbe called J.P. Morgan Chase & Co.

Each share of J.P. Morgan will be exchanged for 3.7 shares ofChase, worth about $207 a share based on Tuesday’s closing stockprices.

J.P. Morgan Chairman and Chief Executive Douglas Warner willbecome chairman of the new company and Chase Chairman WilliamHarrison will become its president and chief executive.

J.P. Morgan Chase will have about $660 billion in assets,rivaling Bank of America, which has $679 billion in assets,as the second largest bank holding company in the United States. Itwill still trail Citigroup, which had $791 billion as of June 30,2000.

Merger Seen as Good Match

On Wall Street today, shares of J.P. Morgantraded down $4.19 at $181.25, after weeks of its stock priceinching upward on rumors that it was an acquisition target. ChaseManhattan fell $2.13 to $50.69.

A potential merger between banking powerhouses Chase and J.P.Morgan is seen by analysts as a good match because the two firms’array of services complement each other.

The corporate side of the business, encompassing the mergeradvisory, trading and bond operations, will be known as J.P.Morgan while the consumer side will be known as Chase. Theconsumer arm includes credit cards, Chase’s large New York areabranch network, mortgage banking and insurance.

“It’s a good potential fit because there are quite a lot ofareas where the two are complementary,” said Ron Mandle, a bankinganalyst at Sanford C. Bernstein & Co.

Building on Each Other’s StrengthFor example, J.P. Morgan has a strong foothold in the investmentbanking arena, especially in the lucrative area of underwritinginitial public stock offerings.