MUFG to acquire $705 mil. worth of Morgan Stanley common stock.
Mitsubishi UFJ Financial Group Inc. said Wednesday it will acquire $705 million worth of common stock to be issued by U.S. investment bank Morgan Stanley, up from its earlier announcement that it will obtain $600 million worth.
MUFG also said the transaction involving the acquisition of 29,375,000 shares, which had been planned for Wednesday, will take place May 22 instead. It also revised upward the number of shares from 25 million, announced early this week.
MUFG will not incur additional costs through the transaction, which will involve effectively swapping part of the preferred shares the Japanese financial group holds in Morgan Stanley for the common stock.
Morgan Stanley said last week it will raise capital by selling common stock and bonds after the U.S. government announced results of its health assessment of major U.S. banks known as ''stress tests,'' which showed the investment bank needs to boost capital by $1.8 billion to weather a possible further deepening of the recession.
MUFG's acquisition of common shares is apparently aimed at covering the anticipated dilution of the value of shares it holds in Morgan Stanley resulting from the struggling U.S. bank's additional stock issuance.
Last October, MUFG acquired $9 billion worth of preferred shares in Morgan Stanley and took a 21 percent stake in it on a fully diluted basis.
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|Publication:||Japan Weekly Monitor|
|Date:||May 18, 2009|
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