Breakingviews | Cazenove

Considered view

16 Nov 2009 09:47

Partner power

Context News

JPMorgan is nearing an agreement to buy out Cazenove, its partner in UK investment banking, according to people familiar with the situation.

The price under discussion is close to 530p a share, valuing the business at £998m, said one person with knowledge of the talks.

Cazenove owns 50% of JPMorgan Cazenove, a joint venture initiated in 2004 which contains the UK firm's investment banking business.

Trading in Cazenove shares was suspended in the summer when talks between the two firms stepped up. While not listed, the company is subject to UK Takeover Panel disclosure rules.

The joint venture generated £395m in revenue in 2008 and pre-tax profit of £135m.

Cazenove also owns a small US trading business.

Talks stalled in the autumn following the departure of Bill Winters, JPMorgan's investment banking chief who sat on the joint venture's board.

The US bank is to pay £1bn to buy out Cazenove, its UK investment banking partner. Caz’s employee shareholders have good reason to sell out after a bumper year. But JPMorgan needs to proceed with care. A mishandled integration could make an expensive deal even more costly.

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