Today’s Wall Street Journal has an interesting article (reg req’d $) about whether certain fairness opinions rendered in M&A transactions are really independent or fair. The J.P. Morgan/Bank One deal was among those profiled:
In the biggest U.S. merger this year, J.P. Morgan Chase & Co. announced last January it would acquire Bank One Corp. To assure investors it was paying a fair price, J.P. Morgan told them in a proxy filing it had obtained an opinion from one of “the top five financial advisors in the world.”
The in-house bankers at J.P. Morgan endorsed the $56.9 billion price — negotiated by their boss — as “fair.”
It also looks like the NASD will weigh in; it has reportedly launched an enforcement inquiry:
into conflicts that can arise with fairness opinions. The NASD is also seeking comment on potential new rules requiring more disclosure of the financial incentives that bankers and their clients have for endorsing deals.
J.P. Morgan undoubtedly had the best legal minds review and approve these arrangements. One reality of corporate governance today, however, is that certain things look different later when described on page one of the Wall Street Journal.
Professor Ribstein also covers this.