Reason of Merger
JP Morgan and Chase Manhattan both were very old financial services company of USA. But, both were facing increasing competition in the financial market from the big multinational banks. In order to gain in terms of market share and to achieve a competitive edge, both the organizations decided to sign a merger deal.
This merger formed the combined entity of JP Morgan Chase, which became a global leader not only in investment banking and retail finance but also in asset management and wealth management. According to a study, the Hedge Fund segment of JP Morgan Chase became the largest hedge fund of USA ,in 2007, in terms of assets.
Gains from Merger
The merger between Chase Manhattan and JP Morgan was one of the largest acquisition deals in the US history of bank mergers. After this merger, JP Morgan Chase became the third largest financial company in USA after Citigroup and Bank of America. It was expected that after the merger, the merged financial institution JP Morgan Chase would gain in terms of assets, as the firm's asset value would reach the figure of $660 billion.
The Merger Process
This merger deal was done through swapping of shares. It was decided in the merger deal that, every 1 share of JP Morgan could be converted into 3.7 shares of Chase Manhattan. In the merger process, it was also decided that both the financial organizations would exchange their preferred shares.