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Merrill Rethinking Chase Offer?

Is Chase Manhattan finally getting close to a merger with Merrill Lynch to shore up its underwriting and asset management businesses?

The brokerage firm (MER) is reportedly reconsidering a stock-for-stock offer from Chase (CMB) to create a "one-stop" financial services giant, according to an upcoming March 22 report in Forbes magazine.

Merrill declined to comment on the report, which cites documents showing Merrill top executives mulling the merger.

Chase's eagerness to strike a deal has been closely tracked on Wall Street. At an analysts' dinner in mid-February, Chase stoked the flames by saying any large deal would have to be "transformational."

CEO Walter Shipley has informally approached executives at Merrill, Morgan Stanley Dean Witter (MWD), J.P. Morgan (JPM) and Goldman Sachs about a combination, offering up the CEO slot as an inducement to a deal, according to The Wall Street Journal on Thursday.

Chase's potential partners are said to have been discouraged by cultural differences and costly infrastructure, the Journal said.
Yet this time around, Merrill might be willing to step up as rivals Citigroup (C), Credit Suisse, UBS AG and Morgan Stanley surpass Merrill in market value, Forbes says.

"As the mighty bull enters the new millennium, it is looking weary and confused," the Forbes report said. "Its overseas markets have been thrown into turmoil, and consumers' overnight acceptance of the Internet for brokerage and ecommerce has Merrill scrambling to establish its place."

By Emily Church