(Updates Feb. 5 timeline with sale of commodities business to
March 19 U.S. investment bank JPMorgan Chase &
Co. has sold its physical commodities arm to Mercuria
for $3.5 billion in cash, catapulting the Swiss trade house into
the top tier of commodities traders.
While parts of JPMorgan's commodities business have passed
through the hands of some of the most well-known names in the
raw materials markets, its core is comprised of two enterprises
considered among the most successful of their time: Sempra
Commodities and Bear Stearns' power and gas desk.
But major parts of the JPMorgan business were extracted from
the ashes of failure, including a base metals operation that
endured through the near-collapse of Metallgesellschaft and the
Enron meltdown, and a trading platform that dates back to the
days of failed investment bank Drexel Burnham.
More recently, much of the business had already been bought
and sold twice in the past five years, once when Royal Bank of
Scotland bought a 51 percent stake in Sempra Commodities
and then again when RBS was forced to sell it to JPMorgan.
A partial history of the business is below:
THE EARLY YEARS
1980s - Drexel Burnham Lambert expands into physical energy
trading, hiring a team that includes future Sempra chiefs David
Messer and Frank Gallipoli.
1986 - UK-based warehousing group Henry Bath & Sons is taken
over by Metallgesellschaft (MG), a huge German conglomerate and
one of the world's largest physical and futures metal traders,
according to a history on its website. r.reuters.com/myk56v
Early 1990 - AIG acquires the commodity trading business of
Drexel Burnham, which had filed for bankruptcy.
1997 - Pacific Enterprises and Enova Corp acquire the energy
unit of AIG Trading for $225 million. (The utilities merge one
year later to form Sempra Energy )
2000 - Enron buys UK-listed MG Plc, including Henry Bath
warehouses, for $448 million.
ENRON OUT, OTHERS JUMP IN
2002 - Sempra Energy Trading buys Enron Metals Ltd, the
former-MG metals division of the failed U.S. Enron for $145 mln.
2002 - UBS buys Enron's energy trading business in exchange
for royalties to Enron creditors. The deal includes leases to
several million barrels of oil storage in Canada.
2004 - Sempra Energy Trading is renamed Sempra Commodities.
By 2005, the unit contributes more than half of parent company
Sempra's net income; makes over half a billion dollars in 2007.
September 2005 - Bear Stearns moves into energy trading
through a joint-venture with Calpine. Deal ends six months
later, but Bear Stearns continues to expand in the power and gas
November 2006 - Bear Stearns buys Delta Power Co., a private
power-plant developer with 1,380 megawatts of capacity.
May 2007 - Bear Stearns' commodity arm buys the electricity
trading book, and gas and power contracts of Williams Cos for
$512 million, giving it about 7,700 MW of gas-fired tolling
capacity and 1,800 MW of full-requirements power supply.
JPMORGAN'S ACQUISITION SPREE
March 2008 - JPMorgan buys Bear Stearns, including its
now-large energy trading business.
Early 2008 - JPMorgan buys carbon offsetting company
ClimateCare. (The firm's management takes it private in 2011)
April 2008 - Royal Bank of Scotland acquires controlling
stake in Sempra Commodities for $1.7 billion to form RBS Sempra
February 2009 - JPMorgan buys UBS's global
agricultural business and Canadian energy unit in 2009,
including two million barrels of long-term oil storage leases.
September 2009 - JPMorgan buys UK-based EcoSecurities, which
developed clean energy programs and carbon offsets as part of
the Kyoto protocol, for $200 million.
November 2009 - RBS says it will sell its 51 percent
interest in RBS Sempra Commodities in exchange for government
July 2010 - JPMorgan closes deal to buy RBS Sempra's global
oil and metals business, plus its European gas and power desk,
for $1.6 billion. r.reuters.com/jyk56v
October 2010 - JPMorgan buys the North American wholesale
gas and power trading book of RBS Sempra for $220 million. The
value of the gross assets was put at $6 billion as of June, and
the business had recorded pre-tax profits of $22 mln in the
first six months of the year. r.reuters.com/hyk56v
June 2012 - Freepoint Commodities acquires metals
concentrates business from JPMorgan.
July 2013 - JPMorgan announces plan to explore "strategic
alternatives" for its physical commodity trading division amid
margin and regulatory pressure to quit risky businesses.
February 2014 - Mercuria enters exclusive negotiations to
buy JPMorgan's physical commodities business, sources say.
March 19 2014 - Mercuria buys the physical commodities
business of JPMorgan for $3.5 billion, with the all-cash
transaction expected to close in the third quarter of 2014.
(Writing by Shadi Bushra and Jonathan Leff, editing by David