JPMorgan Chase & Co. is beefing up in Europe by buying the half of Cazenove it does not already own in a deal valuing the 190-year old UK stockbroker at 2 billion pounds ($3.4 billion).
The deal, which will land windfalls for dozens of top London dealmakers, sees David Mayhew remaining chairman of JPMorgan Cazenove and Chief Executive Naguib Kheraj overseeing the integration in a short-term role.
JPMorgan, the second largest U.S. bank by assets, bought half of Cazenove five years ago to create a UK investment banking joint venture, and as expected took up the option to complete the deal.
JPMorgan Cazenove will continue to operate under that name and become a wholly owned part of the U.S. bank's UK investment banking operations. It will combine cash equities and research operations for the first time.
We see this as the natural evolution of this partnership with a lot of opportunity to do more both in corporate finance and in equities, Kheraj told reporters on a conference call.
JPMorgan has weathered the financial crisis better than most rivals and is now taking advantage of their problems and grabbing opportunities.
It will pay 535 pence per Cazenove share, valuing the 50 percent stake at 1 billion pounds ($1.7 billion) and all of the venerable stockbroker at double that.
The deal marks the end of any independence for Cazenove, which made its name raising funds for railway companies in the 19th Century and is today adviser to more top UK companies than anyone else.
Joining Mayhew with fixed roles at the wider investment bank are the heads of JPMorgan Cazenove's three core areas. Alan Carruthers will become head of cash equities for Europe, Ian Hannam remains chairman of capital markets and Charles Harman stays as head of UK investment banking.
Cazenove, dubbed the Queen's stockbroker, prides itself on its deep and strong ties across the City of London. Many of its bankers have been at the firm for decades.
Mayhew, who joined Cazenove in 1969, is in line for a 19 million pound payday, based on his ownership of 3.6 million ordinary shares. Top dealmakers such as Carruthers and Hannam will also get millions of pounds from the deal.
There are about 1,500 shareholders and about 36 percent of shares are owned by current staff. Some 54 percent is owned by former employees, 8 percent is owned by institutions and 1 percent is owned JPMorgan.
Cazenove shares do not trade on an open market, but can be bought or sold on an internal market during narrow windows twice a year. They last traded at about 260 pence in March.
(Reporting by Steve Slater; Editing by Hans Peters)