Still investing in Morgan Stanley. Mitsubishi said this morning that it will buy a 21 percent stake in the bank, preferred shares with 10 percent yield.
Earlier: Treasury's Got Mitsubishi's Back
Mitsubishi Takes Half A Page From Buffett's Play(a) Book
Update: Joint press release from Mitsorgan:
Mitsubishi UFJ Financial Group Closes $9 Billion Equity Investment in Morgan Stanley as Part of Global Strategic Alliance
Monday October 13, 8:10 am ET
TOKYO & NEW YORK--(BUSINESS WIRE)--Mitsubishi UFJ Financial Group, Inc. ("MUFG") (NYSE: MTU - News), Japan's largest financial group and the world's second largest bank holding company with $1.1 trillion in bank deposits, and Morgan Stanley (NYSE: MS - News), a global financial services firm and a market leader in investment banking, today announced that MUFG has closed on a $9 billion equity investment in Morgan Stanley that gives MUFG a 21 percent ownership interest in Morgan Stanley on a fully diluted basis. The investment is part of a previously announced global strategic alliance.
Under the revised terms of the transaction, MUFG has acquired $7.8 billion of perpetual non-cumulative convertible preferred stock with a 10 percent dividend and a conversion price of $25.25 per share, and $1.2 billion of perpetual non-cumulative non-convertible preferred stock with a 10 percent dividend.
MUFG and Morgan Stanley have already identified numerous areas of potential collaboration for their global strategic alliance, including corporate and investment banking, certain areas of retail banking and asset management, as well as lending activities such as corporate and project related loans. The alliance will provide both MUFG and Morgan Stanley with a valuable strategic partner as they seek to enhance their global footprints and capture financial services opportunities around the world. MUFG will receive a Morgan Stanley Board seat and the companies will establish a Steering Committee to maximize the strategic benefits of their alliance.
The MUFG investment further bolsters Morgan Stanley's already strong capital position. Morgan Stanley's Tier 1 Capital Ratio is now estimated to be more than 15.5 percent on a pro-forma basis as of August 31, 2008. This is far in excess of the 6 percent required by the Federal Reserve to be treated as well-capitalized and is one of the highest Tier 1 Capital Ratios among bank holding companies peers. The MUFG investment also reduces Morgan Stanley's leverage ratio to just under 20 times and its adjusted leverage ratio to just over 10 times on a pro-forma basis at August 31, 2008. In addition, Morgan Stanley has continued to reduce the size of its balance sheet since the end of the third quarter. As of today, total assets are now under $900 billion, down from $987 billion at August 31, 2008.
Nobuo Kuroyanagi, MUFG's President and Chief Executive Officer, said, "Despite a very challenging environment, MUFG and Morgan Stanley have demonstrated our mutual commitment to this strategic alliance and have revised the terms of our investment in the best interests of both companies and our shareholders. We are now looking forward to working with Morgan Stanley to deliver the significant strategic benefits that we believe our alliance will bring."
John J. Mack, Morgan Stanley's Chairman and Chief Executive Officer, said, "We are honored to welcome Mitsubishi UFJ, a global leader in commercial banking, as a long-term investor and strategic partner of Morgan Stanley. We are working toward numerous areas of collaboration, and we are confident that these two world-class institutions will create a powerful global alliance in the current challenging market environment. Today's investment further bolsters our strong capital position and, together with our strategic alliance, will accelerate our transition under our new bank holding company structure and help us realize opportunities created by the continuing dislocation in the financial markets."
Half of the convertible preferred stock automatically converts after one year into common stock when Morgan Stanley's stock trades above 150 percent of the conversion price for a certain period and the other half converts on the same basis after year two. The non-convertible preferred stock is callable after year three at 110 percent of the purchase price.
Lazard served as financial advisor to MUFG, and Sullivan & Cromwell LLP and Mori Hamada & Matsumoto served as MUFG's U.S. and Japanese legal advisors, respectively. BlackRock provided advice to MUFG on asset valuation. Wachtell, Lipton, Rosen & Katz served as legal advisor to Morgan Stanley.
Posted by guest , Oct 13, 2008 8:18AM
The deal is done
Posted by guest , Oct 13, 2008 8:22AM
Miracles do happen!
Posted by Daniel Harrison , Oct 13, 2008 8:22AM
It was always done, I've been saying that for days. The problem is that financial journalists (and bloggers) have NO idea of how the banking system works, so they rush on the "doom and gloom" cart to get more readers. Anyone who took the time out to actually talk to the guys at Mitsubishi knew it was done yesterday!
Posted by guest , Oct 13, 2008 8:23AM
get back to drafting that MS press release
Posted by guest , Oct 13, 2008 8:24AM
wait for it....
yes at the original $25.25 conversion price.
Take that fucking rumor-mongering journalists and bloggers and shorts.
Posted by guest , Oct 13, 2008 8:24AM
Mit did not invest in a single common share. The is a bad sign.
Posted by guest , Oct 13, 2008 8:26AM
@4- you're a dumb ass, it's not the original deal.
Posted by guest , Oct 13, 2008 8:27AM
#6. You are an idiot. No shares, so they could get that 10% on preferreds and save face with their shareholders by renegotiating a better deal.
You're a fucking idiot. Why are you here? No common shares? That was the point you dumbfuck. Now, go get an education.
Posted by guest , Oct 13, 2008 8:28AM
Why hasn't there been any discussion of all the names and phrases we could come up with using the initials MUFG?
Posted by guest , Oct 13, 2008 8:30AM
#5. The original conversion price was $31, you mouthbreathing retail.
Posted by guest , Oct 13, 2008 8:39AM
Kick these Yahoo scum off this site so we can get back to fleecing them. I hope you #&^@ were short financials because you're getting one hell of a margin call this morning.
Posted by guest , Oct 13, 2008 8:40AM
yay! they got 8 yards! only 22 to go
Posted by guest , Oct 13, 2008 8:42AM
Mouthbreathing retail actually making money for their firm this year, you should add, #5.
Posted by guest , Oct 13, 2008 8:47AM
@ #10
I would rather be retail where can tell my clients to shut the fark up and let me handle their money while I collect daily commissions than a bitch boy institutional guy sucking the ass of clients who think they are smarter than u and tell u to make them a ham sandwich with grey poupon while they call u a useless piece of human feces as they redeem their money.
I manage the real peoples money and u manage bitch's money!!
Posted by guest , Oct 13, 2008 8:50AM
OMG! It happened! I'm screwed.
Oh yeah. I did a straddle. Whoops.
Posted by guest , Oct 13, 2008 8:52AM
Retail makes money u fuktard! Go give a Dirty Sanchez to your institutional investors begging them not to redeem their funds and your prime broker not to yank your credit you leveraged monkey!
Posted by guest , Oct 13, 2008 8:53AM
Ah well, the Armegeddon trades don't go through. At least not before the afternoon.
The snap euphoria trades do, though. Cha-ching, capital raised.
Posted by guest , Oct 13, 2008 9:09AM
#10 , yes sorry. i meant to say they lowered the new conversion price from 31 to $25.25. But, it did not go below the $25.25 share price that MUFG was proposing to buy $3 billion at in the original deal.
No need to vent your frustrations out on 'retail' people. I know you must be the only smarty here.
Posted by guest , Oct 13, 2008 9:11AM
Armageddon was being priced in. Now we'll see a melt-up. Rising asset prices and falling borrowing costs might get us an upward feedback loop.
We won't be going back to 1500 in the SPX, but there is no reason for us to retest the lows if there are no more big bank bankruptcies.
Posted by guest , Oct 13, 2008 9:15AM
10 percent the new killing it ... or perhaps be killed
Posted by guest , Oct 13, 2008 9:18AM
Random question. Anyone know if the friday fight went down? Anyone actually show up?
Posted by guest , Oct 13, 2008 9:31AM
@21
Yes. I need to know too
Posted by guest , Oct 13, 2008 9:44AM
@22
Yes. I need to know too
Posted by guest , Oct 13, 2008 9:45AM
@23
Yes. I need to know too
Posted by guest , Oct 13, 2008 9:52AM
commenter20@gmail.com - Here's the email account that was set up. Email him.
Posted by guest , Oct 13, 2008 9:57AM
Bess,
What do you think about calling it "Morgsubishi" instead of "Mitsorgan?" Rolls off the tongue a little better IMO.
Posted by Bess Levin , Oct 13, 2008 10:01AM
@26- I find Mitsorgan much easier to say than Morgsubishi, which also has too many syllables. Plus, part of the deal was that Mitsubishi takes the lead on the name.
Posted by guest , Oct 13, 2008 10:21AM
It's official - they CLOSED. $9Bn for 21% at 25.25. F'k all you rumor mongering haters!
Posted by guest , Oct 13, 2008 10:42AM
too Morgan Stanley/Mitsu...didn't read.
Tanned Banker