Magazine article American Banker

Chase Becomes Object of Takeover Rumors after 6% Stake Bought

Magazine article American Banker

Chase Becomes Object of Takeover Rumors after 6% Stake Bought

Article excerpt

Is Chase Manhattan Corp. likely to merge with a big U.S. regional bank?

Investor Michael Price's disclosure last week that he has amassed a 6.1% stake in Chase has renewed speculation that the big New York bank might be the target of an aggressive acquirer.

Analysts remain divided over whether Chase will stay independent by reorganizing internally or succumb to the wave of consolidation sweeping the banking industry.

"This has certainly focused people's attention," remarked David Berry of Keefe, Bruyette & Woods Inc. He singled out BankAmerica Corp., NationsBank Corp., and Chemical Banking Corp. as the three banks that would fit best with Chase.

"Acquisition of Chase would move Chemical's New York banking business decisively into a No. 1 position and would preempt entry by another strong player into the region. There would also be substantial cost-saving opportunities in a variety of processing, corporate banking, and retail product business," Mr. Berry noted.

Chase's mortgage banking, retail, credit card, and corporate businesses, as well as its Infoserve unit would all fit relatively easily into Chemical's operations, giving the new bank enormous economies of scale, he added.

Mr. Berry, who predicted that any one of the three banks might pay between $55 and $65 a share for Chase, (the bank's stock was trading at $42.75 late Friday), added that BankAmerica might also be a candidate.

"Bank of America has got major ambitions in the corporate banking business, and getting Chase's network would be lovely," he said. "Their (Chase's) 50-country network is not something anyone is going to be able to build from scratch."

Chase executives were unavailable for comment, but analysts said that even if a merger with a large U.S. regional makes sense, it is not likely to happen for several years. …

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