JPMorganCazenove said yesterday that it saw an opportunity to make more of the synergies between the expanding US bank and the 190-year old broker. They also confirmed details of a £1bn takeover deal.
JPMorgan is paying £535p a share for Cazenove, that’s £25p in the form of a dividend next month and the rest when the transaction closes early next year.
The transaction completes the joint venture, that was created five years ago when the US bank paid a sum of £459m for a 50% stake.
The venture has increased since. JPMorgan has used its balance sheet and broader financing strengths to make the deal. It has dominated the capital raisings in recent months, from Xstrata to HSBC and Lloyds and others.
The franchise is made possible by David Mayhew, who stays the chairman of JPMorgan Cazenove, and who will enjoy a £19m from the deal, which is not that bad at all!!
However, the architect of the 2004 joint venture could easily have got it wrong.
In the autumn of that year, there was another proposal on Mr Mayhew's desk: a full acquisition deal worth up to £800m from Lehman Brothers, the now defunct US bank. "Phew," said one person close to yesterday's deal!
JPMorgan confirmed that Naguib Kheraj, JPMorgan Cazenove's chief executive, would take charge of completely integrating the businesses. He said "no timing targets" had been set for integration, though it was "not an overnight affair".
Mr Kheraj said "not very much" would change in the core corporate finance segment of the company. But he added: "One area we have not maximised is cross-border risk management and treasury work." Joining up with JPMorgan will allow Cazenove to offer a more international service, he said.(JPMorgan is a worldwide company)
It is in the equities(shares) arena that most problems will occur. Currently, we have 2 platforms. JPMorgan and Cazenove. They will now become one, with a shrinkage of staff without doubt, this is terrible!
Important Cazenove executives will be retained. Ian Hannam will continue as head of capital markets; Charles Harman will become head of UK investment banking; Alan Carruthers will be head of European cash equities; Laurence Hollingworth will be head of UK equity capital markets and David Knox will be head of UK equity research.
For the nine months to September, Cazenove generated net profits of £65.4m on revenue of £216.7m, well ahead of last year.
Teirlynck Mathias 3FV3
Source: Times
