Chase, United Kingdom bank discuss merger

Robert Fleming targeted for takeover

price is main hurdle

Weekend meeting expected

Banking

March 24, 2000|By BRIDGE NEWS

LONDON -- Chase Manhattan Corp. , the third-largest U.S. bank, confirmed yesterday that it is in talks to acquire Robert Fleming Holdings Ltd., a privately held United Kingdom investment bank.

Chase's confirmation follows a statement by Fleming that "it is in discussions with The Chase Manhattan Corp. concerning a possible combination of their businesses." Fleming said talks "are at an early stage" and that no further announcement would be made "unless and until appropriate."

Shares of New York-based Chase soared on the news, rising $6.9375, or 7.58 percent, to close at $98.50.

The latest round of negotiations, which concluded Wednesday night, fell short of a formal deal as both sides disagreed over price and management structure, sources close to the talks said. Chief negotiators from the two financial companies could make more headway at a meeting this weekend, possibly setting up a formal announcement for as soon as next week, sources said.

"From what we know, the talks are pretty close, but there are a number of issues still left," said one source at a major investment banking firm. "They've agreed to come back Sunday and re-evaluate things."

The deal's biggest hurdle remains the price. Fleming's value is seen at around $4.71 billion, though there are reports Chase is trying to bargain that price down, according to a report in the Financial Times.

In addition, the closely-held Fleming continues to have an internal debate on whether it should remain independent despite growing pressure as the United Kingdom financial services industry continues to consolidate. The Fleming family, which includes James Bond creator Ian Fleming as one of its members, owns some 30 percent of the company.

There is speculation that current Chairman John Manser has resisted any offers to acquire the company, asserting it has more value as one of the last private institutions in Britain. Meanwhile, Roderick Fleming, who becomes chairman next month, is said to be entertaining offers so the company is not squeezed out by bigger firms crowding the U.K. market.

Any deal would instantly give Fleming a much broader reach for marketing its asset management business. In addition, the Chase name would do much the same in boosting the firm's presence in future deals.

Chase has been rumored to be seeking acquisition targets to build up its investment banking capabilities.

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