Sometimes it seems Wall Street analysts discuss possible company mergers like fantasy football league geeks talk about possible trades of their players. Monday, it was talk that Citigroup Inc. would be better off with J.P. Morgan Chase & Co. Now, chatter has circulated that beleaguered Washington Mutual Inc. would be a good takeover candidate by none other than J.P. Morgan.
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A story from MarketWatch quotes a research note from Dick Bove, an analyst at Punk, Ziegel & Co., about WaMu on Tuesday: "The company is probably now a candidate for takeover, but the number of potential buyers is very limited with J.P. Morgan Chase being the only realistic name at the moment." But with all of WaMu's latest problems such as billion-dollar losses from the subprime mess resulting in additional layoffs — 3,150 to be exact — other observers feel that a J.P. Morgan-WaMu union is unlikely because of the risk associated with the Seattle's company's big exposure to the mortgage business.
But if a merger is not likely happening, some such as stock pundit Jim Cramer of The Street.com feel that WaMu needs to fire its chairman and CEO Kerry Killinger. That seems like a stronger possibility, but with Citigroup having had problems finding a quality chief of its own, would WaMu run into the same issue of finding a qualified replacement?
Maybe WaMu's best alternative for help is a cash infusion from wealthy foreigners. The bank is reportedly exploring that option. Switzerland's UBS took that approach Monday landing cash infusions from investors in the Middle East and Singapore. This follows a handful of American banks, most notably, Citigroup, which received $7.5 billion form oil-rich Abu Dhabi investors a couple of weeks ago.
For WaMu, it needs to act fast because its stock is slipping and its losses are mounting. Doing nothing will only drag it deeper into the quicksand of a more perilous future. — Gerald Magpily
See story from The Seattle Times
See story from MarketWatch.com
See video from TheStreet.com
See Dealscape: A Citi-BofA merger? Why bother?
