JPMorgan Chase Closes Acquisition of Vastera

Deal brings together finance, global trade management capabilities; analysts see converging trends

Deal brings together finance, global trade management capabilities; analysts see converging trends

New York  April 6, 2005  JPMorgan Chase Bank has completed its acquisition of trade management specialist Vastera, henceforth to be known as JPMorgan Chase Vastera, the bank has announced.

Vastera's solutions automate the required trade management processes associated with the physical movement of goods internationally. JPMorgan Chase said the acquisition would provide its clients with a "one-stop shop" that addresses the increasing challenges and risks associated with moving goods across international borders.

"The JPMorgan Chase solution facilitates the seamless management of information and processes in support of physical goods movement and financial settlement of the complete global trade process," the bank said in announcing the completion of the deal.

Analysts See Convergence

In a research note on the deal, technology consultancy AberdeenGroup said that, with the Vastera acquisition, JPMorgan Chase would have additional services to offer its large customers to help them manage the physical movement of goods across borders. "Vastera's capabilities in areas like compliance and import/export documentation management will reduce customs hold-ups and delays that cause financial uncertainty, impact days sales outstanding (DSOs), and increase working capital and total delivered costs," AberdeenGroup suggested.

The consultancy advised that Vastera customers should expect JPMorgan Chase to continue to have Vastera deliver consulting services, trade content, software and managed services to its existing customers. "The acquisition will strengthen Vastera's international presence and trade content capabilities, especially in China," AberdeenGroup wrote. "Expect JPMorgan Chase to focus first on selling Vastera's current offerings to its existing large clients. Developing innovative combined services to drive new types of value will be a future initiative."

Elsewhere, AMR Research said that the deal highlights the growing significance of global trade management. "Leading companies are realizing that the abilities and services required to ease the flow of global commerce are critical to tomorrow's economy," AMR wrote in a research alert issued when the deal was first announced in January.

Finally, in another note issued at the time the deal was announced, Adrian Gonzalez, with ARC Advisory Group, wrote: "At first glance, JPMorgan Chase may seem like an unlikely acquirer of Vastera, but the role and value of finance in global trade management (GTM) is often more critical and valuable than the actual movement of goods. The ability to finance inventory, for example, can have significant implications on cash flow, taxes and other balance sheet entries which ultimately grab the attention of chief financial officers and Wall Street."

"Through the acquisition of Vastera, JPMorgan Chase becomes the first global financial institution to offer an integrated cash, trade and logistics solution that brings together the physical and financial supply chains," said Paul Simpson, trade services executive with JPMorgan Chase. "Vastera brings with it over 400 companies around the world for which it documents imports and exports, determines correct licensing and classifications, ensures compliance and tax requirements, manages inventory and tracks payments ... everything to make the physical movement of goods easier and more efficient."

Under the agreement and plan of merger, Vastera shareholders are receiving $3.00 for each outstanding share of Vastera common stock they own, for a total transaction value of approximately $129 million.

Additional Articles of Interest

 Imminent terrorist attacks or no, your competitive advantage demands that you secure your company's supply chain. Read more in "Supply Chain Security: Is Your Company Complacent or Engaged?," in the February/March 2005 issue of Supply & Demand Chain Executive.

 For a look at how Tyco Fire & Security is tackling trade compliance issues in its global supply chain, see "Turning Global Trade Compliance Into a Competitive Advantage," in the August/September 2004 issue of Supply & Demand Chain Executive.

 For more information on the challenges and opportunities presented by increasingly global supply chains, see the special in-depth report in the August/September 2004 issue of Supply & Demand Chain Executive, which includes the following articles:

 For more information on the global supply chain, with a focus on security issues, see "Building the Secure Supply Chain," the Net Best Thing article in the June/July 2003 issue of iSource Business (now Supply & Demand Chain Executive) magazine.

 For more information on the latest trends in the logistics space, see the article "The Analyst Corner: Fulfillment & Logistics" in the October/November 2004 issue of Supply & Demand Chain Executive.