CNN/Money 
News > Deals
graphic
$58B bank deal set
J.P. Morgan agrees to buy Bank One in a deal that would combine two of the nation's biggest banks.
January 15, 2004: 11:07 AM EST

NEW YORK (CNN/Money) - J.P. Morgan Chase & Co. has agreed to buy Bank One Corp. for about $58 billion in a merger that will combine two of the biggest banks in the United States, the companies announced Wednesday.

The merged entity would rank as the nation's No. 2 bank behind Citigroup, with assets of $1.1 trillion and 2,300 branches in seventeen states.

On its own, J.P. Morgan would have fallen to No. 3 after Bank of America Corp.'s $47 billion deal to buy FleetBoston Financial Corp. is completed. Bank One currently ranks No. 6.

The deal for Chicago-based Bank One will extend J.P. Morgan's reach through the Midwest and the Southwest, and lessen its dependence on investment banking and trading, analysts said.

J.P. Morgan also gets a strong retail and credit card presence with Bank One, the world's largest Visa card issuer.

Analysts were enthusiastic. "There is a real logic to [the Morgan-Bank One merger]," Bert Ely, a banking consultant at Ely & Co. in Alexandria, Va., told Reuters. "The only thing I would wonder about is might a competing bid come in."

Bank One's Jamie Dimon is expected to take charge of the merged entity after two years.  
Bank One's Jamie Dimon is expected to take charge of the merged entity after two years.

"Lovely deal," Michael Stead told Reuters. Stead, who runs the $550 million Wells Fargo SIFE Specialized Financial Services fund, owns shares of both banks. "They would command a wider geography, and they could cross-sell products more easily. A combination would be better than the sum of the parts."

J.P. Morgan Chase, whose roots date to 1799, was formed three years ago from the merger of Chase Manhattan and J.P. Morgan.

The merger of J.P. Morgan and Bank One, expected to close in mid-2004, would be the third largest in U.S. financial services. In 1998, Travelers Group bought Citicorp for $70.2 billion to create Citigroup, and NationsBank bought BankAmerica for $59.2 billion to create Bank of America Corp.

The terms

Under the deal announced Wednesday, New York-based Morgan said it would exchange 1.32 shares of its stock for each Bank One share.

graphic
graphic graphic graphic
graphic
William Harrison, chairman and CEO of J.P. Morgan Chase, and James Dimon, chairman and CEO of Bank One, talk about their proposed $58 billion merger.

premium content Play video
(Real or Windows Media)
graphic
graphic

At Wednesday's closing prices, that would equal $51.77 a share, or about $58 billion based on Bank One's roughly 1.12 billion shares outstanding.

J.P. Morgan said Chairman and CEO William Harrison, 60, will take those roles at the merged company. Bank One chief Jamie Dimon, 47, will become CEO of the company in 2006, the companies said.

That represents a coup for Dimon, who moved to the helm of Bank One in the spring of 2000 after leaving Citigroup, where he had been considered a leading contender for the top job.

Cost cutting is part of the logic of the deal. Harrison said "we will have about 10,000 job eliminations," about 7 percent of the banks' U.S. work force. He said the banks haven't decided where cuts will be, but "the number will hopefully not be near 10,000 because we'll have attrition."

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.

J.P. Morgan said it expects $3 billion of pretax merger costs, and $2.2 billion of pretax savings over three years. It said it expects the merger to boost profit in 2005.

Bank One (ONE: Research, Estimates) stock jumped 10 percent while J.P. Morgan (JPM: Research, Estimates) shares slipped 4 percent in after-hours trading on Instinet.

J.P. Morgan had assets of about $793 billion as of Sept. 30 while Bank One's assets totaled $290 billion.  Top of page


-- from staff and wire reports




  More on NEWS
Reporter behind story of $72 million teen trader stays at NY Mag
Not everyone is a fan of 'Serial'
'Colbert Report' says goodbye with record ratings
  TODAY'S TOP STORIES
Sony exec: Studio did not 'cave' to hackers
Obama: Sony made a 'mistake' in pulling film
'Colbert Report' finale draws record ratings




graphic graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.