J.P. Morgan (NYSE:JPM) could announce as early as today that they had come to an agreement to acquire some of the energy assets owned by Royal Bank of Scotland and Sempra Energy.
Details of which parts of the energy business will be acquired haven’t been released yet, but the payment is said to be $1.7 billion, according to unnamed sources.
One thing for sure is known, as expected, they won’t be buying the RBS Sempra Commodities unit, which is considered the best part of overall business, but also is considered to have some overlap with existing businesses already operating in the U.S. by J.P. Morgan.
It is more probable the major reason for not buying the entire company was that some of the parts, including the commodities unit based in the U.S. just wasn’t a good fit for J.P. Morgan, and nothing much else.
The reason the business is for sale in the first place is because RBS Sempra, as part of a deal to receive government aid form the British Government, would told it had to divest of some of their businesses in order to receive it. Other portions of the business they have had to sale is their insurance business, which was very profitable, as well as a number of their retail branches.
Now it seems Sempra Energy may be the leading candidate to acquire the RBS Sempra Commodities unit, based in the U.S., as they already own a 49 percent stake in the company.
There is no doubt RBS Sempra Commodities is the crown jewel of the overall company, generating about 64 percent of all the trading revenue of the company in the first nine months of 2009.
In reality, I think J.P. Morgan is looking outside the U.S. for growth in spite of those numbers, and their focus on the airline industry in India is one confirmation they’re advertising themselves as ready and willing to commit billions to that sector and region.
