Chase in £7.7bn Fleming bid

Chase Manhattan Corp., the third-largest U.S. bank, will pay £4.5 billion in cash and stock for Robert Fleming Holdings, a British investment bank and asset management group, the companies announced today.

The deal, which still requires regulatory approval, would strengthen Chase's asset management and securities business in its quest to become a bigger player in global investment banking.

Chase has agreed to pay £2.6 billion in cash with the remainder in common stock.

The price is substantially higher than what some analysts had expected. Robert Fleming, one of the few remaining independent financial groups in Britain, had been estimated to be worth up to £3 billion.

"This transaction will benefit clients of both firms as we will be able to deliver a wider range of quality asset management, securities and investment banking products and services," Chase chief executive William Harrison said in a joint statement.

Harrison told reporters that the acquisition would give Chase one of the "premier asset management brands" in Asia and Europe.

"These are two markets we think are significant growth markets that we want to be larger in," he said.

Harrison added that Robert Fleming is also strong in the securities business in Asia, particularly in the state-owned sector, where Chase has been weak.

Fleming chief executive William Garrett said the decision to forgo the British bank's independence was driven by its need for greater size in order to compete.

"The emergence of a number of powerful global houses has changed the competitive landscape over the last few years," Garrett said.

"While we have responded successfully to this and have just completed a record year for the Flemings Group, we recognize that global markets require global reach."

By linking up with Chase, Robert Fleming could expand its reach in North America and other regions.

The buyout marks the latest step in Chase's evolution away from pure commercial banking. Last year, Chase purchased the investment bank of Hambrecht and Quist for dlrs 1.35 billion.

By acquiring Fleming, New York-based Chase follows in the tracks of rival Citigroup Inc. Earlier this year, Citigroup purchased the investment banking business of Schroders, another independent British financial company.