Citi subprime ills could spark takeover by JPMorgan: analysts | Reuters
I just love headlines like these; wild speculation with no hope to materialize. It never going to happen. Although Dimon would love to be back into the driver seat at Citi, a position he coveted before he was forced to leave the bank, I do not think he will take the bait.
Citi would not offer JPM any significant assets in the US, but it will offer them a significant international exposure, which is what is really valuable at Citi. JPM lacks that international exposure and buying it at this time would be opportune investment. But the premium of fixing Citi, I think is too taxing. Citi is too large and disorderly and have morale issue at the moment. Combining two large entities like JPM and Citi will be a huge undertaking that even deal savvy Dimeon will find hard to accomplish. JPM would much better in finding smaller acquisition internationally than buying Citi.
Citi shareholders may not like this as well. Citi has Price Alwaleed, Eddie Lambert, Abu Dabhi Fund and others who invested in a troubled company to realize excess returns. A buyout at this time will short change that prospect.
I will be surprised if an offer is made to Citi.
Photo courtesy of barron's
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