Chase to Buy Washington Mutual?

January 11, 2008 No Comments »

First it was Bank of America taking over Countrywide, and now there’s word that Chase may be planning an acquisition of its own.

CNBC reported this morning that Washington Mutual is in “very preliminary talks” with JP Morgan Chase, saying, “No deal is imminent but the talks were held fairly recently.”

Chase has been rumored to be interested in the Seattle-based thrift for quite some time, looking to expand into faster-growing regions of the country through WaMu’s extensive branch network.

And a takeover bid would make sense, given the recent turmoil surrounding Washington Mutual and its deflated share price.

Last month, the struggling bank and mortgage lender said it would need to cut more than 3,000 jobs and slash its dividend to raise up to $2.5 billion in capital after recording huge write-downs tied to bad home loans.

CNBC also noted that Chase may be interested in two other regional banks, Georgia’s SunTrust and Pennsylvania’s PNC Bank, saying an acquisition is likely at some point this year.

Shares of WaMu rose on the news, climbing 79 cents, or 5.58%, to $14.95 in afternoon trading on Wall Street.

On Wednesday, the nation’s largest savings and loan dipped to $10.73, marking a 13-year low.

The question remains whether a buyout would come at much of a premium to the current stock price, given the circumstances.

There is also merger speculation involving names such as Bear Stearns, First Horizon, KeyCorp, and National City.

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