Chase (NYSE:CMB) is a leading corporate lender but has expressed a
desire to round out its equities business by bolstering its
investment bank. With this aim, the bank held unsuccessful
talks with top brokerage firm Merrill Lynch and Co. Inc. last year.
Hambrecht & Quist's stock price closed at 41-1/16 on
Monday, then jumped to 49 in pre-open trading on Tuesday.
Chase's shares finished at 74-2/16, but were quiet before the
opening bell.
Extends Chase's investment base Hambrecht & Quist, whose recent third-quarter profits rose
167 percent to $37.1 million, began in 1968 and has since
helped take public such high-flying tech companies as
Amazon.com Inc. Nasdaq:AMZN), Netscape Communications (NYSE:AOL) and
Apple Computer Inc. (Nasdaq:AAPL). In this deal, it would assume the
Chase name and remain based in San Francisco.
Operationally, it would join Chase's investment banking
arm, run by James Lee. Daniel Case III, chairman and CEO of
Hambrecht & Quist, would become chairman and CEO of Chase
Securities West and head of Chase's global technology group,
the companies said.
As part of the deal, Chase would set up a $200 million
retention pool of its own stock, payable over four years, to
keep key Hambrecht & Quist employees. The retention of top
investment bankers is vital in an acquisition, because the
business thrives on these bankers' personal relationships with
companies.
The agreement has been approved by the boards of both
companies and is expected to be completed by the end of this
year.
"The acquisition of Hambrecht & Quist is an important
strategic move for Chase," William Harrison Jr., Chase's
president and chief executive, said in a statement. "It extends
Chase's one-stop investment banking range of products in the
highest growth sectors of the U.S. economy, where media,
telecommunications, information technology and the Internet
converge."
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