Magazine article American Banker

Stocks: Morgan Stock Gets a Boost on Warburg's Takeover Talk

Magazine article American Banker

Stocks: Morgan Stock Gets a Boost on Warburg's Takeover Talk

Article excerpt

Shares of J.P. Morgan & Co. surged $7.625, to $146.75, Thursday as brokers at Warburg Dillon Read talked up the stock as a takeover target.

The brokers began advising clients after meeting Thursday morning with analyst Thomas Hanley, who outlined potential merger scenarios.

Reiterating his recommendation from a report in April, in which he identified the venerable New York banking company as a target, Mr. Hanley said the buyer is likely to be one of several companies eager to build their investment banking businesses: Chase Manhattan Corp., Goldman Sachs Group Inc., First Union Corp., or Morgan Stanley Dean Witter & Co.

Morgan "may decide to sell out over the next year or so," Mr. Hanley said in his April report.

A spokesman for Morgan said the company does not comment on market rumors. One trader said the enthusiasm was overdone. He said the stock would probably fall back in coming days when no deal materializes. Morgan has been subject to takeover speculation for the past six months, following losses in last fall's market slump.

The boost in stock price added $2 billion to J.P. Morgan's market capitalization on a day when other stocks posted modest increases.

The Standard & Poor's bank index added 1.96% and the Dow Jones industrial average 0.97% The Nasdaq bank index added 0.61% and the S&P 500 0.26%

Shares in the companies Mr. Hanley listed as buyers rose with the market. Signs that inflation is at bay-and interest rates will remain stable-were displayed in the government's report on producer prices. …

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