Dimon reflected on the legendary series of acquisitions he'd made as Sandy Weill's right-hand man while the two of them had built Citigroup. They had paid little or no premium for most of their acquisitions, including the final one: Travelers' purchase of Citigroup. "It's true that when you have a low-premium deal, you have a better platform to build value, because you can build the business instead of slashing and burning simply to save enough to pay for the premium," Dimon says. (To be sure, he and Harrison plan to cut J.P. Morgan's workforce by 7% over three years.) And in the end Dimon concluded that the potential long-term returns from a J.P. Morgan/Bank One combination would more than compensate for a low deal premium.
... In the days and weeks after Dimon and Harrison announced the $58 billion merger, the deal has been widely lauded. Analysts agree that the combined bank will be big and strong in a panoply of businesses in which one side or the other was undersized or weak. "Their strengths and weaknesses match up almost perfectly," says Thomas Brown, an independent analyst with Bankstocks.com. And the market weighed in with a positive assessment: Contrary to Harrison's fears, J.P. Morgan's stock has actually risen 2% since the announcement.
But the main reason the deal is getting kudos is that it brings Jamie Dimon back where he belongs, to the big stage. He's returning from the wilderness of regional banking to face the biggest challenge of his career: running an immense, complicated new creation, the hybrid of a giant investment and commercial bank. It's a role Dimon was born to play—and one in which he has no doubts that he'll succeed. "In the long term we'll enrich shareholders a lot more because I didn't get a big premium," he brags. "Okay, so maybe Bank One lost out on $8 billion or so, but we'll take J.P. Morgan's stock to $100 in five years. That will add over $200 billion in market value!"
--- JAMIE DIMON, The Dealmaker and the Dynamo
By Shawn Tully
FORTUNE magazine
January 2004
Well, let's watch him do it. |
