Fortune’s Shawn Tully reckons that JP Morgan (JPM) and Jamie Dimon aren’t going to spend the rest of the credit crunch sitting on their hands. Rather, Dimon is going to try to exploit depressed share prices and snatch up one of his smaller rivals at a garage sale price.
Tully sees four prime targets on Dimon’s radar screen: Wachovia (WB), WaMu (WM), SunTrust (STI), and American Express (AXP). He lays out the case for each:
- Dimon has already expressed interest, but was outbid by TPG for a minority stake.
- WaMu’s low market cap and depressed share price make the deal more likely.
- Branches on West Coast and in Florida give JPM access to markets in new geographies
- But…WaMu’s heavy exposure to mortgages make any deal risky. [Of course, everything has its price]
- WB’s strength in California, Florida, and big middle-market businesses are exactly what JPM are looking for.
- Dimon has experience running brokerage franchises, and JP Morgan doesn’t own on.
- On the negative side…after its disastrous Golden West takeover, WB is saddled with all kinds of mortgage crap, on which WB will likely take more writedowns. And the board will want to give new CEO Bob Steel time for a turnaround.
- SunTrust has strong businesses in Florida and the Southeast.
- But the lender doesn’t have any branches in California, and its huge portfolio of commercial real estate loans don’t help, either.
- A deal with Amex would help bolster JPM’s presence in the high-end credit card market
- The deal would be complex and pose big integration challenges. Also, considering AXP’s profitability, the deal wouldn’t come cheap.
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