New York, September 13, 2000 -- The Chase
Manhattan Corporation (NYSE: CMB) and J.P. Morgan & Co.
Incorporated (NYSE: JPM) today announced that they have agreed
to merge. The merged firm will be named J.P. Morgan Chase
& Co. Leveraging premier brands and comprehensive
capabilities across an unparalleled client franchise, J.P.
Morgan Chase & Co. will be a formidable global competitor
in financial services, positioned for superior growth and
The merged company will have assets of approximately $660
billion and stockholders' equity of more than $36 billion. On
a pro-forma basis, J.P. Morgan Chase & Co. in 1999 would
have had net income of approximately $7.5 billion and revenues
of approximately $31 billion.
The merger agreement, which has been approved by the boards
of directors of both companies, provides that 3.7 shares of
Chase common stock will be exchanged for each share of J.P.
Morgan common stock. Each series of preferred stock of J.P.
Morgan will be exchanged for a similar series of preferred
stock of Chase, the surviving corporation of the merger. The
transaction is expected to be accounted for as a pooling of
interests and to be tax-free to J.P. Morgan and Chase
stockholders. Based upon Chase's closing price yesterday, the
transaction would have a value of approximately $207 for each
share of J.P. Morgan common stock.
The wholesale business will be known globally as J.P.
Morgan and will encompass investment banking (including
strategic advisory, equity and debt capital raising, credit,
and global trading and market-making activities), operating
services, wealth management, institutional asset management
and private equity. The retail business will be known as
Chase, consisting of credit cards, regional consumer banking
in the New York tri-state area and Texas, mortgage banking,
diversified consumer lending, insurance and middle-market
Douglas A. Warner III, Chairman and CEO of J.P. Morgan,
will become Chairman of J.P. Morgan Chase & Co. and
co-Chair of the firm's Executive Committee, its senior policy
making management group, comprised of senior executives from
both Chase and J.P. Morgan. William B. Harrison, Jr., Chairman
and CEO of Chase, will become President and CEO of J.P. Morgan
Chase & Co. and co-Chair of the Executive Committee. In
addition to Messrs. Warner and Harrison, the Board of
Directors of J.P. Morgan Chase & Co. will consist of eight
members from the current Chase board and five members from the
current J.P. Morgan board.
"This merger is a breakthrough for J.P. Morgan and Chase
that will position the new firm as a global powerhouse," said
Mr. Warner. "With a formidable client franchise and a potent
array of capabilities to address the full spectrum of clients'
needs, we see exceptional prospects for sustained growth and
profitability. A diversified revenue stream enhances those
prospects. And our clients will find a common commitment to
high standards of integrity, excellence and service."
Mr. Harrison said, "This transaction combines the most
comprehensive group of clients with extensive financial and
intellectual capital. We will have the capability to meet our
clients' needs anywhere in the world with trusted advice and
integrated execution. Our new firm will have leadership
positions across a broad array of businesses in growth
markets." (See attached table.)
"Our past mergers have demonstrated that the expansion of
product capabilities applied to a complementary set of clients
results in incremental revenue growth. Expense savings will
also result as we combine duplicate functions. As in the past,
we will focus on a smooth integration and make the new
organization the best of both," said Mr. Harrison.
The members of the Executive Committee, reporting to Mr.
Harrison, will be: Geoffrey T. Boisi, David A. Coulter, Ramon
de Oliveira, Walter A. Gubert, Thomas B. Ketchum, Donald H.
Layton, James B. Lee, Jr., Marc J. Shapiro and Jeffrey C.
Mr. Gubert will be chairman of the J.P. Morgan investment
bank. Messrs. Boisi and Layton will be co-CEOs of the
investment bank and coordinate all of the wholesale banking
activities. Mr. Lee will head the investment bank's new
business and commitments committees, working with many of the
firm's most important clients on new business initiatives. Mr.
de Oliveira will head the institutional asset management and
wealth management businesses.
Mr. Coulter will continue to head the retail business of
the firm and lead its Internet initiatives. Mr. Walker will
continue as head of the new firm's private equity group. Mr.
Shapiro will continue in his present capacity as head of
finance, risk management and administration. Mr. Ketchum will
co-chair the merger transition team with Mr. Shapiro.
In addition, Denis J. O'Leary and Nicolas S. Rohatyn will
co-head the combination of Chase.com and LabMorgan, reporting
to Mr. Coulter.
Chase and J.P. Morgan announced the following additional
senior management positions: Dina Dublon, chief financial
officer, John J. Farrell, human resources, Frederick W. Hill,
marketing and communications, and William H. McDavid, general
Neal Garonzik, vice chairman of Chase, has decided to leave
the firm. Mr. Harrison said, "A little over a year ago, Neal
agreed to join Chase for a period of time to help us with our
equity and asset management strategies. While he was here, we
acquired both Hambrecht & Quist and Robert Fleming and saw
major improvements in the quality and profitability of our
wealth management businesses. Neal's experience has been
invaluable and we will continue to seek his advice."
The merger is expected to result in synergies of
approximately $1.9 billion (pre-tax), consisting of estimated
cost savings of approximately $1.5 billion (pre-tax) and
estimated incremental net revenues of approximately $400
million (pre-tax). The synergies are anticipated to be
achieved by the end of the second year following the merger,
with one-third estimated to be realized in the first year. It
is anticipated that the merger will result in costs of
approximately $2.8 billion (pre-tax), a portion of which will
be taken as a charge upon closing.
The worldwide headquarters of J.P. Morgan Chase & Co.
will be in Manhattan, although no decision has been made as to
the exact location.
Chase and J.P. Morgan have granted each other options to
purchase up to 19.9 percent of the outstanding shares of each
other's common stock upon the occurrence of certain
The deal is expected to close in the first quarter of 2001
and is subject to approval by shareholders of both companies,
as well as by U.S. Federal and state and foreign regulatory
Chase Securities Inc. served as financial advisor to Chase
and rendered a fairness opinion to its Board of Directors.
J.P. Morgan Securities Inc. served as financial advisor to
J.P. Morgan and rendered a fairness opinion to its Board of
Chase can be reached on the Web at http://www.chase.com/, and
J.P. Morgan's web address is http://www.jpmorgan.com/.
Chase and J.P. Morgan will hold a presentation for the
investment community today, September 13, 2000 at 11:30am
Eastern Daylight Time to discuss the proposed merger. A live
audio Webcast of the presentation will be available on Chase's
and J.P. Morgan's investor relations sites at their respective
Websites noted above. In addition, persons interested in
listening to the presentation may dial in at (973)
This press release contains statements that are
forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are based upon
the current beliefs and expectations of J.P. Morgan's and
Chase's managements and are subject to significant risks and
uncertainties. Actual results may differ from those set forth
in the forward- looking statements. These uncertainties
include: the inability to obtain governmental approvals of the
merger on the proposed terms and schedule; the failure of
Chase and J.P. Morgan stockholders to approve the merger; the
risk that the businesses will not be integrated successfully;
the risk that the revenue synergies and costs savings
anticipated from the merger may not be fully realized or may
take longer to realize than expected; disruptions from the
merger making it more difficult to maintain relationships with
clients, employees or suppliers; increased competition and its
effects on pricing, spending, third-party relationships and
revenues; and the risks of new and changing regulation in the
U.S. and internationally. Additional factors that could cause
Chase's and J.P. Morgan's results to differ materially from
those described in the forward- looking statements can be
found in the 1999 Annual Reports on Form 10-K of Chase and
J.P. Morgan filed with the Securities and Exchange