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American Century Stands to Gain in Chase, Morgan Merger


American Century Investments of Kansas City, Mo., could land a windfall of 401(k) business as a result of the merger between J.P. Morgan & Co. and Chase Manhattan Corporation, both of New York, said a spokesperson for American Century.

The deal could open several new distribution channels for American Century as a result of its partnership with J.P. Morgan, which will be acquired by Chase Manhattan to become J.P. Morgan Chase & Co., said Laura Khouri, a spokesperson for American Century.

J.P. Morgan acquired a 45 percent stake in American Century in 1998 and the right to purchase an additional five percent before Jan. 15, 2001. The merger between Chase and J.P. Morgan does not nullify that agreement, Khouri said.

The alliance created J.P. Morgan/American Century Retirement Plan Services and has increased American Century's 401(k) and retirement business from 199,000 plan participants at the time of the merger to over 371,000, Khouri said.

J.P. Morgan Chase will be a boon to J.P. Morgan/American Century Retirement Plan Services which will be able to sell retirement plans to Chase affiliates and partners, Khouri said.

The merger will not affect any other area of American Century's fund business and none of American Century's funds are expected to merge with J.P. Morgan Chase & Co. funds, she said.

It is unclear what kind of strategy J.P. Morgan Chase & Co. will follow with its asset management business which combines $32.3 billion under management in J.P. Morgan funds and $52.4 billion in Chase's Hambrecht & Quist Funds, said Geoff Bobroff, president of Bobroff Consulting of East Greenwich, R.I., a mutual fund consulting firm.

"Up until this point, neither groups asset management business has been a significant player," Bobroff said. But, in assets alone, J.P. Morgan Chase & Company will be among the top five percent of asset managers, he said.