Today JPMorgan Chase (NYSE:JPM) announced it has come to a definitive agreement with Mercuria Energy Group Limited to sell its physical commodities business for $3.5 billion.


Mercuria is an energy and commodities trading firm that was founded in 2004. It will be acquiring the trading business from JPMorgan Chase in an all-cash transaction. JPMorgan says it will work to ensure its assets, transactions, employees, and the physical trading operations themselves are all transitioned smoothly upon the completion of the transaction.

"Our goal from the outset was to find a buyer that was interested in preserving the value of J.P. Morgan's physical business," said the head of JPMorgan's global commodities business, Blythe Masters, in the announcement of the sale. "Mercuria is a global leader in the commodities markets and an excellent long-term home for these businesses."

JPMorgan began looking to get rid of its physical commodities business after new regulations crimped its ability to control power plants, warehouses, and oil refineries.

The sale of the business is subject to regulatory approval, after which the transaction is expected to be completed by the end of the third quarter. The firm also noted the sale is "not expected to have a material impact on JPMorgan Chase's earnings."

JPMorgan Chase highlighted that following the sale it will continue to offer the commodities markets access to its traditional banking operations, which include the valuing and trading of precious metals as well as market making, liquidity and risk management, among other services.

-- Material from The Associated Press was used in this report.


Patrick Morris has no position in any stocks mentioned. The Motley Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.