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J.P. MORGAN TO ACQUIRE BANK ONE

NEW YORK - J.P. Morgan Chase & Co. Inc., the investment and retail banking powerhouse, has agreed to buy Bank One Corp. for about $58 billion in stock, reports Reuters.

The merger would extend J.P. Morgan's geographic reach through the US Midwest and Southwest, and reduce its dependence on investment banking and trading, analysts said.
 
J.P. Morgan, the No. 2 US-based bank by assets, will combine its strong retail and credit card presence with Bank One, the No. 6 US bank and the world's largest Visa card issuer.
 
The merger would also cement J.P. Morgan's position behind No. 1 Citigroup Inc.
 
"There is a real logic to it," said Bert Ely, a banking consultant at Ely & Co. in Alexandria, Virginia. "The only thing I would wonder about is might a competing bid come in."

William Harrison, J.P. Morgan chairman and chief executive, will keep those jobs in the combined company. Jamie Dimon, Bank's One chairman and CEO, will become chief operating officer and rise to CEO in 2006.

Chicago-based Bank One, with more than 1,800 banking offices, is the world's third-largest credit card issuer, behind Citigroup and MBNA Corp. and the world's largest Visa card issuer.

A merger would make Dimon, once a top executive at Citigroup, perhaps a formidable competitor to his former employer.
 
Dimon was ousted from Citigroup after a 1998 power struggle. Sanford Weill, his mentor at Citigroup, remained chairman although he handed over the CEO reins to another long-time confidant, Charles Prince, last year.
 
At Bank One, Dimon has proven to be much like his former boss, Weill, in his bid to cut costs. He has also won praise after replacing two executives and improving mutual fund practices after regulators implicated the bank's asset management unit in the mutual fund trading scandal.

"I'm not surprised that Bank One would be acquired," said Brian Bruce, director of global investments at PanAgora Asset Management in Boston whose $13 billion of assets include both banks' shares. "They're a size that made them a target." More bank mergers are likely, he added.
 
No. 3 Bank of America Corp.'s pending purchase of FleetBoston Financial Corp. would vault that combination past the current J.P. Morgan.

Bank of America in October agreed to pay a 41.5% premium for Boston-based Fleet and was roundly criticized for overpaying.
 
US antitrust officials are expected to sign off on the J.P. Morgan and Bank One merger, antitrust experts said. "The bulk of each other's operations are not in each other's footprint," said Michael Mierzewski, a partner at Arnold & Porter in Washington, DC.
 
J.P. Morgan Chase was formed with the 2001 merger of Chase Manhattan and J.P. Morgan.

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