Even though the two companies have been partners for some time, the bank believed it was important to become the owner of a company that handles the complex management of information involved in moving goods around the world. Dulles, Virginia-based Vastera claims to be the only publicly quoted company focused on global trade and helps its clients through the myriad of regulations that apply in different countries.
Paul Simpson, the bank’s emerging payments and global trade services business executive, said the combination would enable JPMorgan Chase to be the first global financial institution to offer a complete integrated case, trade and logistics system across the physical and financial supply chains.
The willingness of a major bank to offer integrated banking and software services will be viewed with some nervousness by the software industry which has traditionally viewed banks as customers rather than competitors.
One group that will not be complaining is Vastera’s stockholders who saw their shares leap 46.5% to $2.93 when the $3 a share offer was announced.
Vastera has an unimpressive financial record, and in its last financial year to December 31, 2003, it recorded a net loss of $71.2 million on revenue 11.6% higher at $85.2 million. It has been treading water so far this year and in its most recent quarter to September 30, it made a net loss of $1.2 million on 0.5% higher at $21.8 million.
With 50,000 clients in 36 countries, JPMorgan Chase has a huge advantage in marketing its services.
From the bank’s point of view, it has swooped on Vastera at a good time with dramatic changes in world trade as major corporations increasingly outsource manufacturing to countries such as China. In addition, increasing concerns about security have tightened regulations.
