The Wall Street Journal-20080117-Deal Journal - Breaking Insight From WSJ-com
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Deal Journal / Breaking Insight From WSJ.com
Will J.P. Morgan
Pass BofA Next?
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Dimon Overtakes Citi
In Market-Cap Race,
Pursues Higher Bar
It took Jamie Dimon two years as chief executive of J.P. Morgan Chase to leave Citigroup behind in the market-cap race. It may not take quite so long to surpass Bank of America.
J.P. Morgan reported relatively strong fourth-quarter earnings yesterday that propelled the company's stock nearly 6%.
So now J.P. Morgan's market cap -- at about $140 billion -- is bigger than that of Citigroup, which has fallen to about $130 billion in the wake of its dismal fourth-quarter showing Tuesday.
Mr. Dimon at present needs to add roughly $34 billion to J.P. Morgan's market cap to catch Bank of America ($174 billion market cap) and complete his rise to the pinnacle of financial glory.
Even if Mr. Dimon can't boost the J.P. Morgan stock price in the near future -- it is down 14% in the past year, and 2008 promises to be a tough one for banks -- the investment bank's market value may get a boost from another source: an acquisition.
It is becoming increasingly clear that 2008 may be the year for Mr. Dimon to return to the big-M&A table. The last megadeal he engineered was the 2004 combination of Bank One and J.P. Morgan.
Asked about doing deals on J.P. Morgan's conference call with analysts yesterday, Mr. Dimon said he is "very open-minded."
Pressed on whether he would confine himself to any particular kind of company, for example, the struggling variety, he said he wouldn't. That will likely reignite speculation of a purchase of SunTrust Banks (market cap $21.67 billion); PNC Financial Services Group ($20.72 billion); Washington Mutual ($11.58 billion), which has had its fair share of challenges lately; or possibly even Wells Fargo ($92.64 billion).
Should Mr. Dimon pounce on one of those, and should BofA struggle with its recently announced acquisition of Countrywide Financial, the undisputed market-cap title could soon be his.
-- Dana Cimilluca
Oracle: 'We Don't
Need Bankers!'
Investment bankers can't catch a break these days.
First of all, there have been few deals this year to earn those fat fees on. The biggest had been a measly $4 billion takeover of a struggling mortgage provider, and the acquirer in that case, Bank of America, kept the advisory work in house.
Now comes a deal that even the most discriminating bankers can get excited about, but alas, one of the parties isn't seeking their advice either.
Oracle didn't use an investment bank for its $8.5 billion agreement to buy BEA Systems. The buy side wasn't completely lacking Wall Street's fingertips though; Charles Phillips, a former Morgan Stanley software analyst, is Oracle's president, a title he shares with Safra Catz, who used to work at Donaldson, Lufkin & Jenrette. The company also has a big in-house deal-making team.
Though the news release announcing the deal didn't say so, BEA has been using Goldman Sachs Group's counsel for the Oracle takeover saga. (One thing that hasn't changed in this lean year for bankers is that Goldman seems to land a role for itself on every important deal.) Goldman looks set to earn well more than $10 million for its work, giving rival bankers yet another reason to cry.
-- Dana Cimilluca
