JP Morgan to buy Bank One in merger deal

JP Morgan Chase has agreed to buy Chicago-based Bank One  for about $58 billion in stock, in one of the largest financial mergers…

JP Morgan Chase has agreed to buy Chicago-based Bank One  for about $58 billion in stock, in one of the largest financial mergers in US history.

The acquisition would extend the geographic reach of JP Morgan, which has a major presence in the US northeast, throughout the midwest and southwest, especially in consumer banking. It would also reduce JP Morgan's dependence on investment banking and trading, analysts said.

JP Morgan Chase, whose roots date to 1799, was formed three years ago from the merger of Chase Manhattan and JP Morgan, and is the second-largest US bank. Bank One, with more than 1,800 banking offices, is the sixth largest. As many as 10,000 jobs might be cut, the banks said.

Mr William Harrison, JP Morgan's chairman and chief executive, will keep those jobs in the combined company, which will be named JP Morgan Chase and be based in New York. Its $1.1 trillion of assets will be second to Citigroup.

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The merger would be the third largest in US 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.

Bank One shareholders would receive 1.32 JP Morgan shares for each Bank One share, valuing Bank One at $51.77 per share, a 14.5 per cent premium over its Wednesday closing price.

The merger is expected to close in mid-2004, subject to regulatory and shareholder approval.