Shares of Morgan Stanley took a beating last week as rumors swirled that Mitsubishi UFJ Financial Group Inc. may pull out of its deal to put $9 billion into the investment bank. Mitsubishi UFJ went through with the deal, buying a 21% stake in Morgan Stanley, but not before wringing out better terms for its investment.
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Bloomberg is reporting that Mitsubishi UFJ will now get $900 million in
annual dividend payments from Morgan Stanley, $300 million more than the
two parties initially agreed upon. Additionally, the modified deal gives Mitsubishi UFJ preferred shares that pay 10% in interest, as opposed to
the combination of $6 billion in preferred shares and $3 billion of
common stock when the deal was first announced.
The deal, along with the federal government's bailout plan, quickly
shored up confidence in Morgan Stanley. The cost on credit default
swaps on Morgan Stanley's debt tumbled over 660 basis points after the
capital infusion, while the stock is up over 100% since the announcement. -
George White
See Bloomberg story
See Dealscape post on Mitsubishi UFJ investment
