Monday, September 22, 2008

Mitsubishi UFJ to Invest Up to $8.4 Billion in Morgan Stanley

(Bloomberg) Mitsubishi UFJ Financial Group Inc. will invest up to 900 billion yen ($8.4 billion) for as much as a fifth of Morgan Stanley, the U.S. securities firm seeking capital following the collapse of Lehman Brothers Holdings Inc.

Mitsubishi UFJ, Japan's largest bank, agreed to buy 10 percent to 20 percent of Morgan Stanley, the bank said in a statement. The Japanese firm will start due diligence on Morgan Stanley, according to the release.

The deal marks an about-face for Mitsubishi UFJ Chairman Ryosuke Tamakoshi, who last week said the bank would avoid any immediate investments in U.S. banks following the Wall Street upheaval. Mitsubishi UFJ's backing will help shore up Morgan Stanley after the credit market meltdown eroded investor confidence in its ability to remain independent.

Last week's financial-market turmoil reshaped Wall Street and provided Asian and European firms with an opportunity to grab market share in trading, underwriting stock sales and advising companies on takeovers.

Morgan Stanley and Goldman Sachs Group Inc. won approval yesterday from the Federal Reserve to become banks, effectively ending the era of the Wall Street investment bank and capping a week that saw Lehman file for bankruptcy and Merrill Lynch & Co. rush to sell itself to Bank of America Corp.

The deal would mark the biggest overseas acquisition by a Japanese financial company, according to data compiled by Bloomberg. Nomura Holdings Inc., the nation's largest securities firm, is close to acquiring European and Asian assets of Lehman, three people familiar with the matter said today.

Through the Morgan Stanley investment, Mitsubishi UFJ aims to build its overseas investment banking business, spokeswoman Hirokazu Ushio said in an interview. Like Nomura, Mitsubishi has struggled to expand outside Japan, leaving it vulnerable to a slowing domestic economy.

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