Sept 15: On Saturday, Chase Manhattan Corp. chief executive William B Harrison Jr. handed a check for $800,000 to Venus Williams as he congratulated the tennis star on her victory at the US open. But even as Mr. Harrison continued to host his guests at the event - Chase was the main sponsor - his mind was focusing on another arena and a bigger payload: the plans for Chase to buy venerable JP Morgan & Co. for more than $30 billion. Wednesday, as expected, the two firms confirmed the transaction. A newly formed JP Morgan Chase & Co. would be a financial powerhouse, boasting assets of about $660 billion and stockholder equity of more than $36 billion. Based on 1999 performance, the firm would have had $31 billion in revenue and $7.5 billion in earnings. In assets, this puts the combined bank behind only Citigroup Inc. ($800 billion) and Bank of America ($680 billion). The Chase-Morgan deal was valued Wednesday at roughly $34.3 billion, or $187.54 a share. Mr. Harrison, who will be chief executive of the combined company, has been through this before. The 57-year-old Chase executive was the point man on two previous mergers between Chemical Bank and Manufacturers Hanover and later Chase Manhattan.
But Mr. Harrison's poker face at the US Open belies a flurry of activity behind the scenes, in which executives of the two banks were deciding the top positions of the bank. "They're moving like lightning on this," says Brian Sullivan, managing partner at executive search firm Heidrick & Struggles, which has worked extensively with Chase on personnel issues. "They already know two or three levels down into the company who is going to be doing what." Indeed, the banks announced Wednesday that the executive committee, reporting to Mr. Harrison, will be dominated by Chase staff. Chase executives Geoffrey T. Boisi and Donald Layton will be co-CEOs of the investment bank and coordinate all of the wholesale banking activities. Walter A. Gubert, currently from the Morgan side, will be chairman of the investment-banking operation. In all, the moves underscore that Chase clearly is taking over Morgan. Meantime, the combined institution will immediately generate about $1.9 billion in new growthopportunities, the banks said. And it will allow for as much as $1.5 billion in cost-cutting opportunities, they said. Layoffs in the thousands are expected. The deal is expected to close in the first quarter of 2001.
The union of two of the oldest names in U.S. finance began with a phone call to a secluded resort in northern Michigan in mid-August. There, J.P. Morgan's Chairman and Chief Executive, Douglas Warner, was vacationing with his family when Mr. Harrison called. "Why don't we talk about a combination?" Mr. Harrison recalls asking Mr. Warner. "We quickly agreed that we cold both get very excited about it."
(The Wall Street Journal)
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