Summary
Morgan Stanley (MS) announced a significant transaction agreement with Mitsubishi UFJ Financial Group, Inc. (MUFG) on April 21, 2011. This agreement details the conversion of MUFG's Series B Preferred Stock into Morgan Stanley's Common Stock. MUFG is set to receive approximately 385.5 million shares of Morgan Stanley's common stock upon conversion. This move effectively transitions MUFG from a preferred shareholder to a common shareholder, potentially altering its influence and relationship with the company. The transaction is expected to close by the third quarter of 2011 and is subject to regulatory approvals. Notably, Morgan Stanley determined that a shareholder vote is not required for this conversion. As part of the agreement, MUFG will also gain the right to appoint a second board member, strengthening its governance involvement, which will remain in effect as long as MUFG maintains a significant ownership stake. This development is a continuation of the strategic alliance formed between the two financial institutions in 2008.
Key Highlights
- 1MUFG to convert all Series B Preferred Stock into Morgan Stanley Common Stock.
- 2MUFG to receive approximately 385.5 million shares of Morgan Stanley Common Stock upon conversion.
- 3Transaction Agreement sets conversion rate at 49.1713 shares of Common Stock per share of Series B Preferred Stock.
- 4MUFG granted the right to potentially exchange Series B Preferred Stock for Series D Preferred Stock under specific circumstances.
- 5MUFG will gain the right to designate a second board member, replacing current board observer rights.
- 6Conversion is subject to customary closing conditions and regulatory approvals, with an expected closing by Q3 2011.
- 7Morgan Stanley determined that no shareholder vote is required for the conversion.