JPMorgan Chase ready to make long-awaited commodities deal

For Sale

Six months after announcing plans to sell its physical commodities business, JPMorgan Chase is close to a final deal, according to a source familiar with the matter.

The shortlist of bidders includes the private-equity firm Blackstone Group and the Australian bank Macquarie Group.

Final offers from Blackstone, Macquarie, and a Stamford, Conn. based investment company called Castleton Commodities International are due next week, the source said, and JPMorgan executives are hoping to make a final decision by the end of January.

It isn't yet clear how many of JPMorgan's physical assets the eventual buyer will take on, nor what the price would be. But people familiar with the bank's commodities unit estimate the sale price at between $1.5 billion and $2 billion, based on the assumption that no buyer would purchase the entire suite of holdings on offer. (In initial deal documents, JPMorgan valued the sum of its physical commodities holdings at about $3.3 billion.)

Regardless of which assets the bidder takes on, the person familiar with the matter added, JPMorgan commodities head Blythe Masters and members of her senior team are expected to leave the bank once the physical assets are sold, and are likely to oversee them on behalf of their new owner.

During an earnings call Tuesday morning, JPMorgan executives were largely mum about the pending sale, with Chief Financial Officer Marianne Lake saying only that the bank was selling "the parts of the business that are the most capital-intensive for us."

Amid a regulatory crackdown on bank commodities units and an embarrassing federal investigation into its power business in California and Michigan, JPMorgan announced on July 26 that it would sell its physical commodities assets, which include a global metal warehouse network, energy supply agreements, and power plants.

A Macquarie spokesman declined to comment on its interest in JPMorgan's commodities business, and officials at Blackstone and Castleton had no immediate comment.

-By CNBC's Kate Kelly. Follow her on Twitter @KateKellyCNBC

image: © Valerie Everett

Best place to workThe Best Firm of the Last Decade is...

Register for Financial Markets News Alerts