The
Relationship Between Bidder & Target CEO Compensation And Financial
Performance: A Case Study Analysis Of The 2004 Merger Between JPMorgan
Chase And Bank One (2007)
On January 14 in 2004, a few months after the 47$ billion
offer by Bank of America for FleThBet Boston in October 2003, JPMorgan Chase
announced to buy the ‘Chicago-based Bank One Corp. for $58 billion in stock - a
14% premium - to create a financial institution second in size only to
Citigroup’. On July 1, 2004 the deal was completed as Bank One stockholders
received 1.32 shares of JPMorgan Chase common stock. This event has been the
most recent ‘mega-merger’ within the US money center banks industry. This
industry consolidation has been spurred by the deregulation of financial
markets, which allowed Financial Services companies to diversify their product
portfolios. Although the deal was called a merger, technically JPMorgan Chase
acquired Bank One. The very unusual fact
for this acquisition is that James Dimon who was CEO and Chairman of Bank One
at that time, negotiated to become Chief Operating Officer and to overtake
William B. Harrison’s position as CEO, two years afterwards (The American
Banker, 2004). Furthermore, the deal provided for an even split of the board
and senior roles for several Bank One executives.
10,000 words - 50 pages in length
Excellent use of literature
Excellent in depth analysis
Outstanding piece of work
1. Introduction
2. Literature Review
Shareholder value creation through bank mergers &
acquisitions
The logic of bank mergers & acquisitions
Economies of scale and scope
Improved efficiency
Managerial self-interest
3. Methodology and Data
Case Study Approach
Executive Pay
Financial Data and Variables
Growth
Profitability
Risk of Bankruptcy
Efficiency
Share price
Limitations of Financial Ratios and Data
Event Study
4. Empirical Findings
Executive Pay
Variables
Growth
Profitability
Risk of Bankruptcy
Efficiency
Share price
Event Study
5. Conclusion
References
Appendix
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