J.P. Morgan Sells Commodities Business to Swiss Trader for $3.5 Billion

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J.P. Morgan Chase & Co. in a deal expected to be completed in the third quarter, will sells its commodities business to Swiss trader, Mercuria Energy Group Ltd. for $3.5 Billion. J.P. Morgan Chase & Co. is the largest bank in the United States, and according to Forbes magazine is the world’s third largest public company based on a composite ranking. The hedge fund unit of J.P. Morgan Chase is the second largest hedge fund in the United States.

According to The Wall Street Journal, this deal will be the largest acquisition completed by Mercuria. The company was founded in 2004 by Swiss traders Marco Dunand and Daniel Jaeggi. New York private-equity giant Blackstone Group LP and Australian bank Macquarie Group Ltd. were reportedly rival bidders.

  

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Head of J.P. Morgan Chase & Co. global commodities business, Blythe Masters, said in a statement that, “Our goal from the outset was to find a buyer that was interested in preserving the value of J.P. Morgan’s physical business.”

Acknowledged as a creator of the credit default swap, a popular financial security used to help hedge risk but led to trouble during the financial crisis, a longtime JPMorgan chief financial officer, Ms. Masters is unclear to a potential role at Mercuria. Her position, according to The Wall Street Journal, has been discussed with the deal.

J.P. Morgan’s commodities assets include units that trade oil, natural gas and base metals, as well as hard assets such as gas fields, storage caverns and the Henry Bath & Son Ltd. chain of metals warehouses. Buying these assets, according to The Wall Street Journal, would boost Mercuria Energy’s presence in North American gas and power and reinforce its position in the global metals market.

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Image credit: www.reuters.com